FATF: Stablecoins Fuel On-Chain Illicit Finance
The Financial Action Task Force (FATF) warns that the proliferation of stablecoins is fueling on-chain illicit finance, a crucial development in the fight against money laundering and terrorist financing. The FATF’s recent report highlights the escalating use of stablecoins by North Korean agents and in fraudulent activities,signaling a concerning trend for the global financial system. With a mere 3.8% of stolen Bybit exchange funds recovered, the urgent need for stronger virtual asset regulations becomes glaringly apparent. News Directory 3 reports on these developments to heighten public understanding. The international body is urging global jurisdictions to bolster licensing, identify VASP participants, and enhance cross-border payment oversight. The borderless nature of virtual assets amplifies the need for worldwide cooperation. Discover what’s next as we uncover the potential impact of these regulatory shifts on global finance.
FATF warns stablecoin adoption could boost illicit finance
updated June 26,2025
The Financial Action Task Force (FATF) issued a warning Thursday that the growing use of stablecoins and other virtual assets (VAs) could amplify risks related to illicit finance. the FATF is focused on money laundering, terrorist financing and proliferation financing.
North Korean agents, terrorist financiers and drug traffickers have increased their use of stablecoins over the past year. The FATF noted that stablecoins are now involved in most on-chain illicit activity. The organization released its findings in a report on the global implementation of anti-money laundering and counterterrorist financing (AML/CFT) measures focused on VAs and virtual asset service providers (VASPs).
The FATF cautioned that widespread adoption of stablecoins or vas could substantially increase illicit finance risks, especially if FATF standards for VAs and VASPs are not consistently applied.
The FATF also highlighted that only 3.8% of the $1.46 billion stolen by North Korea in a hack of the Bybit cryptocurrency exchange has been recovered. The organization also noted a significant increase in the use of virtual assets in fraud and scams.
The FATF urged jurisdictions worldwide to enhance their licensing and registration processes,identify individuals involved in VASP activities,mitigate risks associated with offshore vasps,and ensure openness in cross-border payments.
The organization emphasized that regulatory failures in one jurisdiction could have global consequences, given the inherently borderless nature of virtual assets.
In April, reports indicated a 303% surge in cryptocurrency thefts during the first quarter, totaling $1.67 billion. The Bybit exchange hack in February was a primary driver. There were 197 hacks during the first quarter,six more than the previous quarter.
What’s next
The FATF’s call for increased vigilance and regulation signals a likely tightening of global standards for virtual assets and stablecoins, potentially impacting how these assets are used and regulated worldwide. Further international cooperation is expected to combat illicit activities involving virtual assets.