The Financial Action Task Force (FATF) has recently released a report indicating that efforts to regulate virtual assets and service providers have improved globally, but there are still gaps in enforcement, particularly when it comes to the illicit use of stablecoins in 2025.
According to the report, 73% of jurisdictions have implemented laws enforcing the Travel Rule for crypto transfers, but enforcement remains limited. Out of the 85 countries with Travel Rule laws, nearly 60% have not issued compliance findings or directives.
One alarming highlight from the report was a record-breaking $1.46 billion virtual asset theft by North Korean actors from the crypto exchange Bybit. The hackers used social engineering tactics and complex laundering networks involving mixers, OTC traders, and over 125,000 Ethereum wallets. Unfortunately, only 3.8% of the stolen funds were recovered, showcasing the challenges of tracing and repatriating crypto-related proceeds of crime.
Stablecoins have emerged as the preferred method for illicit on-chain activities due to their low cost, fast settlement, and widespread liquidity. Private sector estimates show that over $30 trillion in stablecoin volume was recorded in the past year, alongside the rise of ‘pig butchering’ scams and professional scam networks utilizing AI-generated chatbots and deepfakes to defraud victims.
Despite these risks, only one jurisdiction is fully compliant with FATF Recommendation 15 on virtual asset oversight. 29% of countries were rated ‘largely compliant,’ while half are only partially compliant, and 21% are not compliant at all.
FATF is urging jurisdictions to expedite the licensing and registration of virtual asset service providers, enhance enforcement against unregistered entities, and implement measures to monitor decentralized finance (DeFi) arrangements. While around half of regulators require DeFi projects with identifiable control parties to register as VASPs, enforcement of this requirement remains scarce.
Looking ahead, FATF plans to release targeted reports on stablecoins, offshore VASPs, and DeFi in the coming year. The regulatory body warns that as stablecoins become more widely adopted, inconsistent global regulations will increase the risk of illicit finance and hinder coordinated responses. The next comprehensive update on Recommendation 15 implementation is scheduled for 2026.