The Financial Action Task Force has published a targeted report on stablecoins and unhosted wallets that focuses on peer-to-peer transfers, highlighting how stablecoins’ rapid growth and use outside regulated intermediaries can heighten money laundering, terrorist financing and proliferation financing risks, and setting out recommended actions for countries and the private sector. Stablecoins exceeded USD 300 billion in market capitalisation by mid-2025 with more than 250 in circulation, and Chainalysis estimates they accounted for 84% of illicit virtual asset transaction volume in 2025, often involving unhosted wallets and complex laundering techniques. Key vulnerabilities include P2P transfers between unhosted wallets that occur without an AML/CFT-obliged intermediary, unofficial redemption channels via non-compliant or unlicensed VASPs, and cross-chain activity that can weaken issuers’ ability to apply controls. The FATF urges jurisdictions to fully implement Recommendation 15 so that stablecoin issuers, intermediary VASPs, financial institutions and other relevant participants are subject to clear AML/CFT obligations, and highlights good practices such as issuers adopting risk-based technical and governance controls including freeze, burn or withdrawal capabilities, customer due diligence at redemption, and smart-contract allow-listing and deny-listing, alongside stronger supervisory and law-enforcement technical capacity, faster domestic and international cooperation tools, and structured public–private partnerships using blockchain analytics. The non-binding report draws on more than 50 submissions from across the FATF Global Network and includes case studies and a set of risk indicators related to the misuse of stablecoins, particularly via unhosted wallets.

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