FATF: Peer-to-peer transfers of stablecoins pose a major money laundering risk; it is recommended that issuers introduce freezing and blacklisting mechanisms.

BlockBeats News, March 5 — The Financial Action Task Force (FATF), the global anti-money laundering organization, stated in its latest report that peer-to-peer (P2P) transfers of stablecoins have become a key source of money laundering risk in the crypto ecosystem, especially when users trade directly through unhosted wallets. Due to the lack of regulated intermediaries, these activities are more difficult to trace and regulate.

FATF indicated that stablecoins are currently the most commonly used virtual assets in illegal crypto transactions. According to Chainalysis data, approximately $154 billion of illegal crypto transactions in 2025 involved stablecoins, accounting for about 84%.

The report recommends that jurisdictions require stablecoin issuers to have technical capabilities to freeze, destroy, or blacklist assets involved in suspicious addresses when necessary, and to embed compliance features such as allow-lists and deny-lists into smart contracts.

FATF pointed out that compared to the highly volatile Bitcoin and Ethereum, stablecoins like Tether (USDT) and USD Coin (USDC) are increasingly used by criminal networks for money transfer and laundering due to their price stability, high liquidity, and ease of cross-border transfer.

Additionally, the report mentioned that North Korean hacking groups and entities related to Iran are using stablecoins to launder proceeds from cybercrimes, converting funds into fiat through over-the-counter (OTC) traders or P2P platforms. FATF called for stronger regulation of stablecoin issuers and the broader adoption of blockchain analysis tools and anti-money laundering measures such as the “Travel Rule” in the crypto industry.