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The Financial Action Task Force (FATF), established by the G7 nations, has indicated that peer-to-peer transfers in stablecoins between individuals pose risks related to money laundering, terrorist financing, and evasion of sanctions.
According to the FATF report, stablecoins are increasingly being utilized for illicit financing, particularly when transactions occur between non-custodial wallets, where users maintain control over their private keys. Such transactions take place without the involvement of regulated intermediaries, which raises the potential for financial crimes, as expressed by the international agency.
The FATF has advised stablecoin issuers to implement technical measures to block, freeze, and seize coins. This is essential for transactions involving addresses that are not included in approved lists or have been blacklisted. This would facilitate law enforcement in curbing illegal activities associated with suspicious crypto addresses, the authors of the report state.
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The FATF referenced a recent report from Chainalysis analysts, which claims that stablecoins accounted for approximately 84% of the total volume of illicit cryptocurrency transactions recorded in 2025 ($154 billion). This indicates that stablecoins have become the predominant asset for illegal cryptocurrency activities, the FATF emphasized.
The organization noted that due to their stable value linked to fiat currency and the capability for international transfers, stablecoins are increasingly appealing to criminals. Malefactors often employ stablecoins in complex money laundering schemes to obscure the origins of funds, executing transactions across multiple wallets and blockchains before converting tokens into fiat currency through exchanges or over-the-counter brokers.
In contrast to more volatile cryptocurrencies like Bitcoin and Ethereum, USDT and USDC have emerged as relatively stable means for transferring proceeds. The report also mentions that North Korean hackers have increasingly turned to stablecoins for laundering illegally obtained funds and their conversion.
In 2024, the FATF downgraded Russia’s rating due to insufficient regulation of cryptocurrencies and oversight of illegal operations involving digital assets. This is partly because legislative proposals for regulating the crypto industry in Russia are still under development.
