The report noted that out of the 85 countries with Travel Rule laws, nearly 60% have yet to issue compliance findings or directives.
Overall, stablecoins have become the dominant vehicle for illicit on-chain activity, driven by their low cost, fast settlement, and broad liquidity.
Despite these risks, the report found that only one jurisdiction is fully compliant with FATF Recommendation 15 on virtual asset oversight. Meanwhile, 29% of countries were rated ‘largely compliant,’ while about half remain only partially compliant and 21% are not compliant at all.
FATF urged jurisdictions to accelerate licensing and registration of virtual asset service providers, strengthen enforcement against unregistered entities, and implement measures to monitor decentralized finance (DeFi) arrangements.
The report also noted that around half of the surveyed regulators require DeFi projects with identifiable control parties to register as VASPs, but enforcement remains rare.
Looking ahead, FATF plans targeted reports on stablecoins, offshore VASPs, and DeFi over the next year. The regulatory body warned that as stablecoins approach mass adoption, uneven global regulation will heighten illicit finance risks and hamper coordinated responses.
The next comprehensive update on Recommendation 15 implementation is due in 2026.
