The Financial Action Task Force (FATF) said “stablecoins are the most popular virtual asset used in illicit transactions,” including Iran and North Korea, and therefore called for stricter oversight of stablecoin issuers in a 42-page report published Tuesday.
In January 2026, the global watchdog said it found that stablecoins accounted for the most illegal onchain activity. It estimated that there was about $51 billion in illegal stablecoin activity related to fraud and scams by 2024.
In its March 2026 report, the task force again warned that dollar-pegged tokens have become a key vehicle for illicit financing. It cited a Chainalysis report that said stablecoins accounted for 84% of the $154 billion in illicit virtual asset transactions by 2025. The report highlighted cases involving North Korean and Iranian actors using stablecoins such as USDT for crowdfunding and cross-border payments linked to sanctioned activity.
TRM Labs released a report in mid-February saying that by 2025, illegal entities received $141 billion in stablecoins, the highest level observed in five years. The report noted that total stablecoin activity exceeded $1 trillion per month on several occasions last year. Sanctions-related activity accounted for 86% of illicit crypto flows, the report said, with bad actors mostly relying on stablecoin platforms.
The FATF said that peer-to-peer transfers via non-hosted wallets present a “key vulnerability” because these types of transactions can occur without anti-money laundering controls.
While stopping short of calling for general blacklisting, the FATF encouraged countries to impose anti-money laundering obligations on stablecoin issuers and consider requiring tools such as freezing wallets and banning or limiting features embedded in smart contracts.
With stablecoins now exceeding $300 billion in market capitalization, the FATF warned that regulators must act quickly to close compliance gaps as adoption accelerates.
