The Financial Action Task Force (FATF) has warned that stablecoins are becoming a primary tool for illicit transactions and called for stronger regulation of their issuers.

PANews reported on March 4th, citing CoinDesk, that the FATF (Financial Action Task Force), the international anti-money laundering standards body, released a report warning that stablecoins have become the most widely used virtual asset in illicit transactions, calling for stronger regulation of issuers. The report, citing Chainalysis data, indicates that stablecoins accounted for 84% of illicit virtual asset transactions in 2025, involving $154 billion. A TRM Labs report shows that illicit entities received $141 billion in stablecoins in 2025, a five-year high, with sanctions-related activities accounting for 86% of illicit crypto fund flows. Actors such as Iran and North Korea are using stablecoins like USDT for weapons of mass destruction proliferation financing and cross-border sanctioned payments.

The Financial Action Task Force (FATF) has warned that peer-to-peer transfers via non-custodial wallets are a critical vulnerability, as these transactions can bypass anti-money laundering controls. The FATF urges countries to impose anti-money laundering obligations on stablecoin issuers and consider requiring them to have wallet freezing capabilities and restricting certain smart contract functionalities. The current market capitalization of stablecoins exceeds $300 billion.