FATF Alerts to 60% Stablecoin Crime Risk, Calls for Global Oversight

The Financial Action Task Force (FATF) has issued an alert highlighting the growing risks associated with stablecoin-related crimes, prompting increased regulatory scrutiny on issuers and platforms globally. The alert underscores the need for enhanced tracking and supervision of stablecoin activities, particularly given their involvement in over 60% of on-chain crime in 2025. This figure emphasizes the widespread use of stablecoins in both legitimate and illicit transactions, making it crucial to bring digital assets under the same anti-money laundering standards as traditional finance.

The FATF's approach is described as "pro-structure, not anti-crypto," aiming to ensure safety without hindering the adoption of digital assets. Aidan Larkin, co-founder of Asset Reality, stressed the importance of rules that ensure safety without hindering the adoption of digital assets. He also suggested that enforcement mechanisms, such as secondary sanctions, may be necessary to hold service providers accountable when they knowingly facilitate illicit transfers.

The misuse of stablecoins was further brought to light by a crypto investigator who alleged that North Korean-linked IT workers have been using USDC to funnel large sums of money. The investigator claims that his allegations are supported by on-chain data and criticized stablecoin issuers for not implementing stronger preventive measures. While tools like asset freezing have been effective in the past, experts argue that a consistent global framework for oversight is still lacking. The broader message is clear: stablecoins themselves are not the problem; the absence of unified, enforceable oversight is.

The FATF's alert, issued last week, urges regulators to focus on mitigating the risks associated with the potential widespread adoption of stablecoins. The organization warns that the use of stablecoins by money launderers, terrorist financiers, and drug traffickers has continued to increase this year. The FATF has also raised concerns about the growing use of stablecoins by various illicit actors, including the Democratic People's Republic of Korea (DPRK). The FATF has called for serious global actions on virtual assets and virtual asset service providers (VASPs) to address these risks.

The FATF's warning is not seen as an attack on the cryptocurrency industry but rather as a call for balanced regulation. Leading crypto intelligence experts suggest that the solution lies in balanced regulation rather than outright restrictions. The FATF is shaping global crypto rules from behind the scenes, with stablecoins and decentralized finance (DeFi) next in line for scrutiny. The broader message is clear: stablecoins themselves are not the problem; the absence of unified, enforceable oversight is.

Stablecoins’ extensive use in illicit activities has led to regulatory focus. Platforms such as Ethereum and Tron, major stablecoin transaction networks, are under increased watch. Potential legislative changes could impact stablecoin issuers, requiring enhanced compliance. This sentiment is supported by statements about aligning oversight with traditional financial standards for safer transactions.

Industry stakeholders are assessing the regulatory landscape's effect on digital finance. Enhanced compliance mechanisms may influence stablecoin issuing processes and technological frameworks. Experts predict stricter regulations could reshape the technological and financial infrastructures surrounding stablecoins. Historical trends support the critical need for adaptable, robust oversight.