FATF: P2P Stablecoin Transfers via Unhosted Wallets Pose Key Criminal Risk

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The global anti-money laundering watchdog, the Financial Action Task Force (FATF), has released a new report highlighting the criminal misuse of stablecoins through peer-to-peer (P2P) transactions using unhosted wallets. 

The lack of a regulated intermediary in these transactions and the perceived stability of stablecoins make them attractive to bad actors, including money launderers, terrorist financiers, fraudsters, and other cybercriminals.

The Targeted Report on Stablecoins and Unhosted Wallets draws attention to the rapid expansion of stablecoins, with a market capitalization exceeding USD 300 billion, and the lack of regulation in this field. 

The FATF notes that stablecoins account for the majority of illicit virtual asset transaction volume, saying they represented 84% of illicit virtual asset transfers in 2025, and are often accompanied by unhosted wallets and techniques designed to obscure the true origin of funds.

This creates potential gaps in oversight, making it harder for authorities to detect money laundering, fraud, and sanctions evasion. However, the organization notes how technologies such as blockchain analytics have been used to disrupt illicit activity misusing stablecoins.

The watchdog has urged countries to be aware of the illicit finance risks associated with stablecoins. It has also called on jurisdictions to implement “proportionate and effective mitigating measures.”

The FATF has said:

Countries should fully implement Recommendation 15 of the FATF Standards to ensure that stablecoin issuers, intermediary VASPs, financial institutions and other relevant participants in stablecoin arrangements are subject to clear anti-money laundering and countering the financing of terrorism obligations.