The Financial Action Task Force (FATF) has issued renewed warnings about the prevalent risks of illicit activities facilitated by stablecoins, highlighting assets like USDC. The international watchdog stressed the urgent need for improved global regulatory coordination and robust enforcement mechanisms to prevent their continued misuse.
Citing surveillance data, the FATF noted stablecoins account for the majority of illegitimate cryptocurrency transactions. This alarming trend underpins its advocacy for globally harmonized licensing and supervision frameworks to bolster oversight and security.
Industry experts echo the call for stronger enforcement. Aidan Larkin emphasized that ensuring sustainable growth and preventing stablecoin abuse demands effective regulatory tools. Blockchain researcher ZachXBT specifically reported instances where North Korean IT operatives allegedly utilized Circle’s USDC for illicit payments.
While acknowledging blockchain intelligence limitations, the FATF pointed to existing mitigating capabilities employed by issuers. For example, Circle has frozen $57 million in USDC linked to North Korean-related activities, and Tether demonstrated similar actions by seizing $225 million in USDT. Such freezing measures act as deterrents against criminal exploitation.
The FATF urged stablecoin issuers universally to adopt stringent Anti-Money Laundering (AML) best practices. This concerted effort aims to foster a more secure, compliant, and trustworthy financial environment for stablecoin adoption worldwide.