FATF Identifies Stablecoins as Major Illicit Finance Tool
- Stablecoins are the most used virtual assets in illicit transactions, accounting for about 84% of the $154 billion in illicit cryptocurrency activities recorded in mid-2025.
- The Financial Action Task Force (FATF) identifies peer-to-peer transfers via unhosted wallets as a significant vulnerability in the stablecoin ecosystem.
- The FATF recommends that jurisdictions require stablecoin issuers to have technical capabilities to freeze, burn, and deny-list wallets to combat illicit activities.
- More than 250 stablecoins were circulating globally by mid-2025, with a market cap of approximately $314 billion.
- North Korean and Iranian actors have been noted for using stablecoins for laundering cybercrime proceeds and financing proliferation activities.
The FATF report highlights the growing misuse of stablecoins in illegal financial schemes, emphasizing their role in money laundering and sanctions evasion due to their stability and liquidity features. The report calls for enhanced regulatory measures to prevent misuse as stablecoin adoption increases globally.
Stablecoins like USDT (Tether) and USDC (Circle) are favored over more volatile assets such as Bitcoin or Ethereum for moving illicit proceeds due to their price stability, making them a key focus for regulators worldwide. (Source)
