The Financial Action Task Force (FATF) published a targeted report on stablecoins and unhosted wallets that highlights growing illicit finance risks from criminals’ misuse of stablecoins, particularly through peer-to-peer (P2P) transactions conducted via unhosted wallets, and sets out recommended actions for countries and the private sector. The report notes rapid growth in stablecoins, with over 250 in circulation by mid-2025 and market capitalisation exceeding USD 300 billion. It cites Chainalysis data indicating stablecoins represented 84% of illicit virtual asset transaction volume in 2025, often involving unhosted wallets and complex laundering techniques. It outlines misuse by money launderers and terrorist financiers, as well as state-linked cybercriminal groups including from the Democratic People’s Republic of Korea laundering proceeds from ransomware and phishing, and Iranian actors leveraging stablecoins to finance proliferation. Key vulnerabilities include P2P transfers via unhosted wallets without a regulated intermediary virtual asset service provider (VASP) or financial institution, and cross-chain activity that stablecoin issuers may struggle to control and that may fall outside counter-illicit finance controls. While FATF Standards do not require jurisdictions to adopt stablecoin-specific regulatory frameworks beyond those applicable to VASPs, the report urges countries to recognise stablecoin-specific money laundering, terrorist financing and proliferation financing risks and to implement proportionate mitigants, including full implementation of Recommendation 15 so that stablecoin issuers, intermediary VASPs, financial institutions and other relevant participants are subject to clear anti-money laundering and countering the financing of terrorism obligations. It also highlights good practices such as requiring issuers to adopt risk-based technical and governance controls (including the ability to freeze, burn or withdraw stablecoins in secondary markets, customer due diligence at redemption, and smart contract controls such as allow-listing and deny-listing), strengthening technical capabilities in supervisory and law enforcement authorities, improving tools and legal frameworks for rapid domestic and international cooperation, and establishing public-private partnerships; case studies drawing on more than 50 submissions illustrate how new technologies and blockchain analytics have been used to detect and disrupt illicit activity.
Financial Action Task Force 2026-03-03
Financial Action Task Force publishes targeted report urging stronger controls on stablecoins and unhosted wallet peer-to-peer transactions
The Financial Action Task Force (FATF) released a report on stablecoins and unhosted wallets, highlighting increased illicit finance risks, particularly in peer-to-peer transactions. Stablecoins accounted for 84% of illicit virtual asset transaction volume in 2025, often involving unhosted wallets and complex laundering techniques. It urges countries to address stablecoin-specific risks with proportionate measures, including full implementation of Recommendation 15, and suggests good practices for issuers and authorities to mitigate these risks.