Global coordination or fragmentation on digital asset standards?

As digital assets become increasingly more mainstream, with adoption rates growing worldwide and the total crypto market cap reportedly crossing the $4 trillion threshold for the first time in 2025, international bodies are seeking greater unity of standards and rules across jurisdictions.

Getting a complete international consensus on just about anything would be a mission impossible too far for even the seemingly inexhaustible Tom Cruise. However, certain areas have made progress toward this ambitious goal, particularly in imposing anti-money laundering and countering the financing of terrorism (AML/CFT) standards, as well as consistent tax reporting rules, on the digital asset space.

Yet, work remains to be done to convince some of the key jurisdictions, not least the top two by adoption rate in the United States and India, to implement these standards.

There is also less international consensus when it comes to whether the digital asset space, or a sub-category of it, represents a systemic risk to the broader financial system, with some pointing the accusing finger at certain stablecoins and tokenized assets, while others (the current U.S. administration) appear far more concerned with how best they can support and boost the industry.

But before looking at where there’s still significant gaps to fill, let’s kick off on an optimistic point of rare international unity: the mission to crack down on global money laundering and illicit finance.

FATF makes progress

The international body spearheading this global AML/CFT effort is the Financial Action Task Force (FATF), an intergovernmental organization set up in 1989 for that very purpose.

When it comes to tackling the digital asset space—a growing sector that has caused increasing AML/CFT concerns, thanks to its association with anonymity and distributed finance—the FATF came up with its so-called ‘Crypto Travel Rule.’

Also known as Recommendation 16, the Travel Rule specifically targets issues around fund transfers, including information sharing. It requires virtual asset service providers (VASPs)—such as exchanges, custodial solutions, and financial service providers—to obtain, hold, and transmit specific originator and beneficiary information immediately and securely when transferring digital assets.

The 2019 update also saw ‘Recommendation 15,’ which deals with AML/CTF requirements for new payment methods, extended to digital assets and VASPs. This included conducting comprehensive customer due diligence measures, maintaining accurate and up-to-date transaction records, and reporting suspicious transactions or activities related to money laundering or terrorist financing to the relevant authorities.

Finally, the FATF also encouraged cooperation and information exchange between nations and recommended that countries regulate and license virtual assets and VASPs to ensure compliance.

According to the international body: “The Travel Rule is a key AML/CFT measure that enables VASPs and financial institutions to prevent terrorists, money launderers, proliferation financiers and other criminals (e.g., fraudsters) from accessing wire transfers to move their funds (including VA transfers, which are functionally analogous to wire transfers), and to detect such misuses when it occurs.”

In October 2021, the FATF further updated its guidance, focusing on several key areas, including clarification of digital asset definitions, directions on stablecoins, and additional guidance for the public and private sectors on implementing the Travel Rule.

However, the Travel Rule wasn’t met with the most enthusiastic reception, at least initially. In 2023, after a series of meetings in Paris, the FATF published a report titled “Outcomes FATF Plenary, 21-23 June 2023,” in which it outlined the progress—or lack thereof—on its global AML/CTF efforts over the past year.

Based on “mutual evaluation and follow-up reports,” the FATF concluded that its rules and recommendations related to VASPs were largely not being followed.

“Almost three-quarters of jurisdictions are only partially compliant or not compliant with the FATF’s requirements,” the report said. “Many jurisdictions have not yet implemented fundamental requirements, and more than half of survey respondents have not taken any steps towards implementing the Travel Rule, a key FATF requirement to prevent funds being transferred to sanctioned individuals or entities.”

One of the key problems the FATF has with its recommendations is that they are just that-“recommendations.” As an international advisory body, it has no solid way of forcing countries to adopt its rules, relying on individual administrations and regulators to deem them implementation-worthy.

But the FATF does have one persuasive tool in its arsenal—those that fall foul of its standards may find themselves on its infamous ‘grey list,’ currently occupied by 20 jurisdictions, including Bulgaria, Bolivia, Cameroon, Monaco, Vietnam, Kenya, and Yemen.

Being on the FATF grey list means a country is under increased international monitoring for weaknesses in its systems to combat money laundering and terrorist financing. It also signals that the jurisdiction is a higher financial risk to the world, and as such, banks, investors, and businesses face extra due diligence checks when dealing with that jurisdiction. This, in turn, can make transactions slower, costlier, and riskier, leading to a reduction in investment and trade coming into the jurisdiction.

Once on the list, a country must implement agreed reforms within set timelines and report progress to the FATF to avoid escalation to the even more notorious “black list,” currently occupied by North Korea, Iran, and Myanmar.

Since the inception of the Travel Rule, and its slow start, the persuasive power of this form of indirect regulation has gradually had an effect, and by June this year, the FATF published its sixth targeted update on the global implementation of AML/CFT rules, in which it reported that “overall, jurisdictions—including those with materially important VASP activity—have made progress since 2024 towards developing or implementing AML/CFT regulation and taking supervisory and enforcement actions.”

According to the FATF update, 99 jurisdictions have now passed or are in the process of passing legislation implementing the Travel Rule, which ensures transparency of information around cross-border payments.

However, the FATF update also highlighted the need for further work on licensing and registration, and that “jurisdictions continue to face difficulties in identifying natural or legal persons that conduct VASP activities.”

Nevertheless, this shows promising signs of a growing international consensus on AML/CFT standards, and it isn’t the only area of digital asset oversight seeing a growing global consensus.

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Global agreement grows on crypto tax reporting

2025 saw more good news for fans of global cooperation, this time in the area of tax reporting. In December, the Organisation for Economic Co-operation and Development (OECD), a global institution that promotes policies to improve world trade and economic progress, published a report on the implementation of its global digital asset tax reporting standards, in which it stated that 75 jurisdictions have now committed to the rules, including “the vast majority” of digital asset centers.

The rules in question were introduced by the OECD in June 2023, with the publication of its ‘Crypto-Asset Reporting Framework (CARF)’—a global tax transparency initiative designed to set a standard for tax reporting and improve the exchange of information between countries on digital asset transactions, to combat tax evasion and avoidance.

The U.K., for example, published its 2025 Budget in December that reaffirmed the country’s commitment to implement new rules mandating digital asset traders to report personal details to trading platforms for tax purposes, beginning January 1, 2026.

This was followed a few days later by Hong Kong—previously not a jurisdiction on the OECD’s list of those committed to CARF—launching a public consultation on how to align itself with the international framework.

“The OECD published CARF to provide for the automatic exchange of tax information on crypto-asset transactions with partner jurisdictions on an annual basis, and incorporated into the CRS new digital financial products and enhanced requirements regarding reporting and due diligence,” explained the Hong Kong government in a statement. “Hong Kong has long been supportive of international efforts to enhance tax transparency and combat cross-border tax evasion.”

While this represents a positive step towards greater global cooperation on digital asset standards, this rosy perception must be caveated by pointing out that a number of the world’s top digital asset jurisdictions have not yet committed themselves to CARF, namely Argentina, El Salvador, Georgia, India, and Vietnam.

Equally, the U.S., home to a large and influential portion of the digital asset industry, as well as some of the world’s most prominent crypto investors, including President Donald Trump, has stated it will not undertake its first exchanges of information until 2029.

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BIS and systemic risk

Global agreement might be uncharacteristically high on AML/CFT and tax reporting, but there is slightly less consistency from governments and international organizations alike on whether the digital asset space poses a systemic risk to the broader economy.

In 2023, the Bank for International Settlements (BIS), an international financial institution of central banks that fosters international monetary and financial cooperation while serving as a bank for central banks, published a report addressing the risks the digital asset industry poses.

Focusing on the dangers the digital asset space poses to ‘traditional finance,’ the report noted how digital asset markets have gone through booms and busts previously that have not led to wider contagion or broader financial stability, but that “the scale and prominence of recent failures heighten the urgency of addressing these risks before crypto markets become systemic”—this was in the light of the 2022 collapse of the Terraform Labs ecosystem and the FTX scandal.

Yet, fast forward a year and by August of 2023, the BIS was warning that digital asset already posed a systemic risk to emerging markets, such as in South America.

In a 51-page report by BIS member central banks in the Americas—within the Consultative Group of Directors of Financial Stability (CGDFS)—the organization argued that “various surveys show that cryptoassets have been more intensively adopted in EMEs [emerging market economies] than in AEs [advanced economies].”

For this reason, it suggested: “There are serious concerns about the ability of emerging market economies to monitor cryptoasset markets and to assess the financial stability risks from cryptoassets.”

Beyond developing economies, more recently, the BIS has narrowed its major concerns down to particularly popular or prevalent sub-sections of the digital asset space, namely stablecoins and tokenization.

Stablecoins have long been a focus for regulators and lawmakers due to their utility and broader use in the payment space. The U.S., for example, finally passed long-awaited stablecoin legislation in 2025, in the form of the GENIUS Act.

Meanwhile, jurisdictions such as U.K. and EU have recognized certain stablecoins as “systemic,” meaning that due to their wide usage, market cap and circulation, they pose a heightened risk to the broader economy if they fail.

In the U.K., these so-called ‘systemic’ stablecoins are placed under the oversight of the central bank, rather than the finance regulator (which oversees the rest of the digital asset space); while in the EU, the Markets in Crypto Asset regulation—which came fully into force at the end of 2024—mandates additional measures for systemic stablecoins comparable to those applied to classify global systemically important banks, including handing the European Banking Authority (EBA) the supervisory responsibilities for issuers.

When it comes to the trending tokenization space, the BIS published a separate bulletin in December that highlighted potential risks similar to those associated with stablecoins, including operational and AML/CFT risks.

The has BIS stopped short of declaring the digital asset sector as a whole a systemic risk, instead focusing on these particularly influential sub-areas, an approach largely in keeping with the global regulatory mood.

However, when discussing systemic risk there’s an obvious elephant in the room, and that’s the economic powerhouse of the world: the United States.

Under the administration of crypto-superfan Trump, the U.S. digital asset sector has been taken off the leash and allowed to roam free, with the aim of boosting financial innovation and making the country the “crypto capital of the world.”

In the Trump 2.0 era U.S., the only people discussing any risks at all related to digital asset are a few vocal and outnumbered democrats on the Hill. From the president’s perspective, the only risk emanating from the blockchain space is central bank digital currency (CBDC), which Trump and his like-minded compatriots have painted as a tool of state oppression and an affront to freedom, privacy, and free-market innovation; hence why he effectively banned CBDCs in an executive order in January.

Thus, when talking about general international agreement on systemic risk amongst certain jurisdictions like the U.K. and EU, and international bodies like the BIS, it must be viewed in the context that, probably the most influential and systemically important economic entity in the world, the U.S., is unlikely to declare the sector a broader risk to the economy any time soon.

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Swings and roundabouts

Taking a birds-eye view of the state of global consensus on digital asset standards, it appears that some promising progress toward deeper cooperation has been made over the past year.

Yet, there is still work to be done and international bodies such as the FATF, OECD and BIS are determined to get more jurisdictions on board with their rules and recommendations.

In this regard, all eyes may be on Trump’s U.S. in 2026 and beyond to show leadership by falling in line, to a greater extent, with these efforts – however unlikely that seems.

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Watch: What’s ahead for crypto regulation? Highlights from Blockchain Futurist Conference 2025

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