The Financial Action Task Force (FATF) has warned that stablecoins are becoming a primary tool for illicit transactions and called for stronger regulation of their issuers.

CoinFeed reported on March 4th, citing CoinDesk, that the Financial Action Task Force (FATF), the international body for setting anti-money laundering standards, released a report warning that stablecoins have become the most widely used virtual asset in illicit transactions, calling for stronger regulation of issuers. The report, citing Chainalysis data, indicates that stablecoins accounted for 84% of illicit virtual asset transactions in 2025, involving $154 billion. A TRM Labs report shows that illicit entities received $141 billion in stablecoins in 2025, a five-year high, with sanctions-related activities accounting for 86% of illicit crypto fund flows. Actors such as Iran and North Korea are using stablecoins like USDT for weapons of mass destruction proliferation financing and cross-border sanctioned payments. The FATF warns that peer-to-peer transfers through non-custodial wallets are a critical vulnerability, as these transactions can bypass anti-money laundering controls.