The majority of countries overseen by the Financial Action Task Force (FATF) have yet to put in place its requirements for firms that handle cryptocurrencies.

Speaking Friday on the occasion of its second 12-month review of progress on crypto regulation, the intergovernmental anti-money laundering (AML) watchdog said so far, 58 out of 128 reporting jurisdictions have implemented its revised standards. 

Of those, 52 are regulating virtual asset service providers (VASPs), and six are prohibiting the operation of VASPs.

Implementing regulations built for traditional finance on pseudonymous-by-design crypto has been challenging. That said, it’s been over two years since the FATF announced crypto would come under its AML rules, and the regulator is now asking stragglers to get their houses in order. 

The private sector was praised for its progress in developing technology to implement the FATF's “travel rule,” which requires companies to identify and share data on those involved in crypto transactions over a certain amount.

“However, the majority of jurisdictions have not yet implemented the FATFs requirements, including the ‘travel rule,’” the FATF said in a press statement. “This disincentivizes further investment in the necessary technology solutions and compliance infrastructure.”

The gaps in implementation, the FATF said, mean there are not yet global safeguards to prevent the misuse of VASPs for money laundering or terrorist financing, leading to “jurisdictional arbitrage.”

The role played by cryptocurrencies in ransomware, much in the news of late, also got a mention.

“The report also identifies potential future FATF actions to prevent the misuse of virtual assets for criminal activities, including by placing emphasis on actions to help mitigate the risk of ransomware-related virtual asset use,” the FATF said.

In March, the FATF issued draft guidance that included additional wording on decentralized finance (DeFi) and stablecoins. It has received so much feedback on that, the organization said it won't make the VASP rules final until its next plenary meeting in October.

“This revised guidance will help assist jurisdictions and the private sector to implement the revised standards as a priority,” the FATF said.