According to the Paris-based watchdog, countries have made “limited progress” in implementing its “travel rule,” which it recommended for global adoption in 2015.
The rule requires regulators to ensure that cryptocurrency firms verify the identities of people involved in transactions in the same way that regular banks do.
The standard is viewed as a way to reduce the possibility of cryptocurrencies being used for money laundering or terrorism financing.
The FATF surveyed 98 jurisdictions in March of this year and discovered that only 29 had passed travel rule legislation and only 11 had begun to enforce it.
The report said the gap in the rules left crypto assets and crypto firms “vulnerable to misuse, and demonstrates the urgent need for jurisdictions to accelerate implementation and enforcement”.
Cryptocurrencies are largely unregulated, and the value of the major ones varies greatly. In recent months, the value has plummeted, wiping out up to two-thirds of the sector’s market value.
Cryptocurrency enthusiasts see cryptocurrencies and the technology that surrounds them as the foundation of a decentralized alternative to the mainstream banking system, and they oppose any regulation.
However, as crypto firms push into the mainstream with high-profile TV advertising and celebrity endorsements, national authorities are increasingly leaning toward stricter rules and consumer protection.
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