Crypto Regulation: FATF Says Rules Spread Faster Than Enforcement
The Financial Action Task Force (FATF) has reported that 83% of surveyed jurisdictions have passed legislation to implement the Travel Rule, a key compliance standard in crypto. This represents progress from the 73% recorded in 2025. However, only 40% of jurisdictions with these laws have taken supervisory or enforcement actions, highlighting a significant gap between rules and enforcement.
The Travel Rule requires virtual asset service providers to collect and transmit originator and beneficiary information for qualifying transfers, essentially ensuring that crypto intermediaries know who is sending and receiving funds. While the industry has debated its feasibility in crypto, most surveyed jurisdictions have now at least moved this rule into law. However, legislation without supervision does not change much; exchanges, brokers, custodians, and payment firms need guidance, inspections, enforcement risk, and technical systems.
FATF's report highlights concerns around scam centers, DPRK cyber theft, DeFi, unhosted wallets, and freeze-resistant stablecoins. The gap between rules and enforcement matters particularly in these areas because crypto transactions are global by design, creating pressure on the system when one country lacks strict regulations while another enforces nothing.