A new report reveals that the majority of jurisdictions around the world have only partially complied with the Financial Action Task Force (FATF) recommendations on regulating virtual assets.
Some progress has been made, but not enough, according to a report These recommendations were issued on July 13. More efforts are needed to fully comply with the FATF recommendations and develop a coherent global strategy for regulating virtual assets.
According to the study:
- 58% of jurisdictions have introduced varying levels of regulation for Virtual Asset Service Providers (VASPs).
- Only 42% of countries have fully implemented the FATF’s “Travel Rule,” which requires the exchange of customer information between virtual asset service providers.
The FATF noted that significant deficiencies remain in areas such as the supervision and monitoring of virtual asset service providers.
Who complies?
Jurisdictions with the highest levels of compliance typically have well-established financial sectors and strong anti-money laundering frameworks.
However, developing countries face greater implementation challenges.
The report stressed the crucial role played by continued international cooperation and information exchange to address these shortcomings and maintain the security and resilience of the virtual asset system, as financial crime threats continue to rise.
Furthermore, the report highlights that despite some progress, additional efforts are needed to fully implement the FATF guidance and achieve a globally coordinated approach to regulating virtual assets.
Discrepancies between cryptocurrency regulation in the US and UK
As the global cryptocurrency market has evolved, regulators in the US and UK have taken divergent approaches to bringing the industry into compliance.
In the United States, the regulatory landscape is characterized by a patchwork of rules, with multiple federal agencies asserting jurisdiction over different aspects of the crypto sector.
The SEC has taken a tough stance, classifying many cryptocurrencies as securities and actively pursuing non-compliant companies. Meanwhile, the Commodity Futures Trading Commission has opted for a more lenient “hold harmless” approach, allowing crypto derivatives trading.
Matters are further complicated by the fact that some US states impose their own licensing and regulatory requirements on crypto companies, which has contributed to a fragmented compliance environment.
On January 10, the U.S. Securities and Exchange Commission (SEC) made an important decision. advertisementIn 2015, the US Senate approved granting certain Bitcoins the same status as exchange-traded products (ETPs). This historic approval recognized the intrinsic value of cryptocurrencies, paving the way for more digital assets to be integrated into the traditional economy. Additionally, it highlighted the SEC’s commitment to strengthening regulation of the crypto industry, a move that is expected to impact US regulatory and compliance frameworks in the future.
While the US has taken a more stringent stance on cryptocurrency regulation, the UK has adopted a more collaborative model in its efforts to bring the industry into compliance.
In the UK, one of the key regulatory strategies involves implementing the Financial Conduct Authority’s “Travel Rule.” This rule is in line with global anti-money laundering standards set by the Financial Action Task Force, which requires cryptocurrency companies to share customer information when transferring funds.
Enforcement of UK travel rules is crucial to combating financial crimes such as money laundering in the crypto space. Aligning regulations with international standards would promote a safer environment for cryptocurrency transactions.
Furthermore, initiatives such as the Bank of England’s efforts on stablecoin frameworks further underscore the UK’s commitment to integrating cryptocurrencies into the broader financial system.
By adopting a collaborative regulatory approach, the UK seeks to establish itself as a leading global hub for innovation in cryptocurrencies and blockchain.
As both the US and UK move into mature crypto markets, they must balance supporting innovation with managing potential risks.
