Global finance watchdog warns stablecoins increasingly used for sanctions evasion and money laundering
The Financial Action Task Force (FATF) says stablecoins are now the most widely used crypto asset in illicit transactions — urging tighter global oversight.
Key findings from its latest report:
• Stablecoins account for the majority of illicit on-chain activity.
• ~$51B in illicit stablecoin activity tied to fraud and scams in 2024.
• In 2025, stablecoins made up 84% of the $154B in illicit virtual asset volume (per Chainalysis).
• TRM Labs reported $141B in stablecoins received by illicit entities in 2025.
• Sanctions-related activity represented 86% of illicit crypto flows.
FATF highlighted growing use of dollar-pegged tokens in cases involving actors from Iran and North Korea, particularly for sanctions evasion and cross-border payments.
One major concern:
Peer-to-peer transfers via unhosted wallets, which can bypass traditional anti-money laundering (AML) controls.
The watchdog stopped short of calling for blanket blacklisting but urged countries to:
• Impose AML obligations on stablecoin issuers
• Address risks from unhosted wallets
• Consider wallet-freezing mechanisms
• Restrict certain smart-contract functions
With stablecoin market capitalization now exceeding $300 billion and monthly activity surpassing $1 trillion at times, regulators are under pressure to close compliance gaps as adoption accelerates.
The stablecoin debate is shifting from growth to oversight.
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