Crypto Regulation: Enforcement Gap Widens as Travel Rule Adoption Rises
The Financial Action Task Force (FATF) has released its Seventh Targeted Update on the implementation of standards for virtual assets and virtual asset service providers.
The report shows that 83% of surveyed jurisdictions have passed legislation to implement the Travel Rule, which requires virtual asset service providers to collect and transmit originator and beneficiary information for qualifying transfers. This is up from 73% in 2025.
However, the report also notes that only 40% of jurisdictions with Travel Rule legislation have taken supervisory or enforcement actions, highlighting a significant gap between rule adoption and enforcement.
The FATF has identified several areas of concern, including organized crime-linked scam centers, DPRK cyber theft, unhosted wallets, decentralized finance (DeFi), and stablecoins designed to resist freezing. The report emphasizes the need for consistent global regulation and supervision to address these risks.