“More than 70% of jurisdictions have yet to issue cryptocurrency regulations, creating vulnerabilities for criminals and terrorists to exploit,” this is a warning from Mr. T. Raja Kumar, Chairman of the Financial Action Task Force. (FATF) announced the latest report on Thursday (March 28).

FATF, the global money laundering and terrorist financing watchdog, has published a report assessing countries' compliance with recommendations on cryptocurrency regulation, revealing that a lack of regulation is creating conditions for illegal activity and calls on states to take immediate action.

FATF President T. Raja Kumar speaks at a press conference in Paris, France, in October 2022 (Amijo Singh/Coindesk)

The agency's leader said that "virtual assets (VA) are like water, they will flow to less regulated areas", creating conditions for money laundering and terrorist financing. Therefore, he emphasized the need for common global regulations to prevent crimes in this field.

Trích dẫn từ báo cáo “Status of implementation of Recommendation 15 by FATF Members and Jurisdictions with Materially Important VASP Activity”.

According to the report, the FATF specifically noted the international and borderless nature of VA, and the relaxation of VASPs in one jurisdiction could have serious implications.

The agency calls on countries to quickly issue cryptocurrency regulations, focusing on the licensing and registration of virtual asset service providers (VASPs), as well as comprehensive reviews of their operations. their business, products and technology.

Although FATF's recommendations are not mandatory, failure to comply could result in a country being globally isolated, having its credit rating reduced, or being placed on the FATF watch list.

Currently, the cryptocurrency industry is currently facing many reputational and safety challenges, due to hacking attacks, sanctions, and accusations of terrorism financing. Promulgating effective regulations is expected to minimize risks, strengthen trust and promote sustainable development of the market.

The FATF report is based on an analysis of the VASP regulatory situation in 39 FATF members and the 20 countries with the most active cryptocurrency activity, accounting for 97% of global cryptocurrency activity. The results show that the majority of jurisdictions still do not have adequate regulations, creating a great risk for the global financial system.