Global Financial Crime Watchdog Urges Stronger Action Against Cryptocurrency Risks
By Elizabeth Howcroft, Reuters | June 27, 2025
PARIS — The Financial Action Task Force (FATF), a leading global watchdog on financial crime, has issued a stark warning regarding the increasing risks associated with cryptocurrencies. On Thursday, FATF called for enhanced regulatory measures worldwide to tackle illicit finance involving virtual assets, emphasizing that current regulatory gaps could have serious global repercussions.
Progress Uneven in Crypto Regulation Compliance
Since 2024, there has been some advancement in the regulation of virtual assets. However, FATF’s latest assessment reveals that many countries still lag behind in adequately addressing crypto-related risks. Of the 138 jurisdictions evaluated as of April 2025, only 40 were deemed “largely compliant” with FATF’s crypto standards. This is a modest improvement from 32 jurisdictions a year earlier, underscoring the slow pace of regulatory alignment worldwide.
“Virtual assets are inherently borderless. Failures in regulation in one country can quickly affect the global financial system,” FATF warned in its statement.
Illicit Crypto Activity Remains Significant
The watchdog highlighted concerning figures from blockchain analytics firm Chainalysis, which estimated that illicit cryptocurrency wallet addresses may have received up to $51 billion in 2024 alone. Identifying the individuals or entities behind virtual asset transactions continues to be a major challenge for authorities globally.
FATF’s report comes amid growing unease among financial regulators over the systemic risks posed by the expanding cryptocurrency sector. Earlier this year in April, the European Union’s securities regulator cautioned that as crypto assets become more connected with traditional financial markets, they could threaten overall financial stability.
Stablecoins a Focus of Illicit Use Concerns
Particular attention was drawn to stablecoins—cryptocurrencies pegged to fiat currencies such as the US dollar. FATF noted that these digital assets are increasingly favored by various illicit actors, including North Korean entities, terrorist financiers, and drug traffickers. The group stated that most illicit crypto activity now involves stablecoins.
Supporting these concerns, the FBI reported that North Korea was behind the theft of approximately $1.5 billion worth of virtual assets from crypto exchange ByBit in February 2025—the largest crypto theft on record. Efforts to contact North Korea’s mission to the United Nations for comment were unsuccessful.
Global Call for Regulatory Strengthening
FATF’s statement urges countries to accelerate efforts in implementing robust regulatory frameworks that improve transparency and traceability of crypto transactions. Enhanced cooperation among jurisdictions is crucial to prevent the misuse of virtual assets for money laundering, terrorism financing, and other criminal activities.
As cryptocurrencies continue to evolve and integrate more deeply into the global financial ecosystem, the watchdog emphasizes the need for governments to adapt their oversight mechanisms to mitigate emerging threats.
Elizabeth Howcroft reports on finance and technology, including Europe’s fintech sector and cryptocurrencies. She contributed to award-winning coverage of the FTX crypto exchange collapse in 2022.