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nid 94155
Jul 22, 2026
tojuri@vixio.com
International
Financial Action Task Force
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1763 charsFinancial Action Task Force Publishes Targeted Report on Decentralised Finance Regulatory Challenges
On July 21, 2026, the Financial Action Task Force (FATF) published a targeted report addressing regulatory challenges arising from decentralised finance (DeFi). The report updates the FATF's previous analysis of DeFi contained in its 2021 Updated Guidance for a Risk-Based Approach to Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), reflecting the sector's substantial expansion and evolution since that guidance was issued.
While DeFi remains a relatively small share of the broader virtual asset market, its growth—combined with increasing participation by institutional investors, VASPs, and other regulated entities—has heightened its relevance within the global financial system. The report emphasises that DeFi presents potential exposure to money laundering (ML), terrorist financing (TF), and proliferation financing (PF) risks. The FATF highlights that effective implementation of FATF Standards in the DeFi context requires a functional and risk-based approach. The report makes several recommendations to help jurisdictions regulate and supervise DeFi arrangements, including determining the existence of control within such arrangements. It also provides recommendations to DeFi arrangements themselves, as well as to financial institutions and VASPs interacting with them, to mitigate risks of criminal abuse and illicit activity.
The targeted report complements the FATF's broader guidance and work on virtual assets, available on the FATF website. This publication reflects the FATF's ongoing commitment to addressing emerging risks in the digital asset space and ensuring that the international financial system maintains integrity as DeFi continues to evolve and attract greater participation from mainstream financial actors.
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2161 charsFinancial Action Task Force Publishes Targeted Report on Decentralised Finance Regulatory Challenges
On July 21, 2026, the Financial Action Task Force (FATF) published a targeted report addressing regulatory challenges arising from decentralised finance (DeFi).
This updated analysis reflects the substantial expansion and evolution of the DeFi sector since FATF's previous analysis, contained in its Updated Guidance for a Risk-Based Approach to Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs), was issued in 2021. It clarifies that DeFi arrangements fall within the scope of the FATF standard on virtual assets (Recommendation 15 — new technologies) if a natural or legal person exercises control or sufficient influence over the arrangement.
Although DeFi currently represents only a small proportion of the broader virtual asset market, its growth, coupled with increasing participation from institutional investors, VASPs and other regulated entities, has heightened its significance within the global financial system. The report emphasises that DeFi presents potential exposure to money laundering (ML), terrorist financing (TF) and proliferation financing (PF) risks.
FATF highlights that the effective implementation of FATF standards in the context of DeFi requires a functional, risk-based approach. The report makes several recommendations to help jurisdictions regulate and supervise DeFi arrangements, including determining whether control exists within such arrangements. It also provides recommendations for DeFi arrangements themselves, as well as for financial institutions and VASPs that interact with them, in order to mitigate the risk of criminal abuse and illicit activity. The report also includes case studies of good practice, such as how jurisdictions have:
Assessed the risks linked to DeFi arrangements.
Advanced efforts to develop an appropriate and proportionate regulatory framework for DeFi arrangements.
Conducted regulatory thematic workshops and established public-private partnerships to promote understanding of risks and compliance in DeFi and advanced asset tokenisation.
Set up dedicated cryptocurrency investigation teams to analyse and investigate the misuse of DeFi protocols by illicit actors.