Global Watchdog Demands Stronger Crypto Enforcement—Is This the Start of a Crackdown?

Regulators are circling the crypto space like sharks in chummed waters. The Financial Stability Board (FSB)—a.k.a. the world's financial hall monitor—just dropped a not-so-subtle hint: nations need to ramp up enforcement, or risk chaos.

Why now? With Bitcoin flirting with $100K again and DeFi protocols swallowing traditional finance whole, the suits in Brussels and D.C. are sweating through their dress shirts. The FSB's warning reads like a bureaucratic scream into the void—'Do something before the plebs realize we're making this up as we go!'

The irony? The same regulators who missed Lehman Brothers in 2008 suddenly became blockchain experts overnight. Meanwhile, your average crypto dev bypasses KYC rules before finishing their morning coffee.

Will this trigger a coordinated crackdown? Unlikely. But it’s another reminder: when legacy finance feels threatened, it doesn’t adapt—it regulates. (And probably shorts BTC on the side.)

Watchdog Flags Rising Stablecoin Abuse by Illicit Networks, Urges Regulatory Action

According to the report, 99 jurisdictions have either enacted or are preparing legislation aligned with the “Travel Rule,” a key mechanism to ensure transparency in cross-border crypto transfers. The FATF also released a new guide outlining best practices for supervising compliance with the rule.

The report flags mounting threats associated with the rise of stablecoins. It said their use by illicit actors, including North Korea-linked hackers, terror financiers and drug traffickers, has grown significantly. It warned that mass stablecoin adoption without coordinated regulation could increase global exposure to illicit finance.

North Korea’s Record Crypto Theft Exposes Weak Links in Global Enforcement

The update follows a series of alarming trends. So far this year, North Korea executed what the FATF described as the largest virtual asset theft in history, stealing $1.46b from exchange platform ByBit.

Only about 3.8% of the stolen funds has been recovered. This shows serious gaps in international asset tracing and recovery efforts.

Meanwhile, fraud and scams continue to trouble the crypto sector. The FATF cited industry estimates that around $51b in on-chain transactions last year were linked to such illicit activity. These cases point to increasingly sophisticated tactics by bad actors. As a result, governments are under growing pressure to enhance cooperation and improve asset seizure mechanisms.

In one example, the UK’s Operation Destabilise demonstrated how coordinated law enforcement can disrupt crypto-fueled criminal networks. The FATF said such efforts must be replicated globally and backed by more robust supervision and enforcement.

The watchdog acknowledged support from analytics firms including Chainalysis, Lukka, Merkle Science and TRM Labs in compiling the update. It also stressed that nearly 98% of the global virtual asset market is concentrated in jurisdictions within the FATF’s Global Network. Bringing these players into full compliance, it said, will be key to reducing worldwide risk.