A recent warning from the Financial Action Task Force (FATF) about the rise of stablecoin-related crimes does not pose a threat to the cryptocurrency industry, according to executives at blockchain intelligence firms.
The FATFโs call to address rising illicit stablecoin activity reflects the need for close monitoring and analysis rather than aiming to curb their growth, according to executives at Chainalysis and Asset Reality.
The global financial crime watchdog sounded the alarm on stablecoins last Thursday, asking regulators to focus on mitigating the risks behind their potential mass adoption.
โThatโs not anti-crypto. Itโs a recognition that credibility and growth depend on regulation that actually works,โ Asset Reality co-founder Aidan Larkin told Cointelegraph.
Stablecoins make up 63% of illicit crypto transfers
โStablecoins are the dominant form of cryptoasset for transacting value as well as for undertaking illicit activity,โ Chainalysis policy adviser Jordan Wain said. He cited data from theย โ2025 Crypto Crime Reportโ by Chainalysis, which identified that 63% of all onchain illicit transaction volumes were denominated in stablecoins.
According to Wain, the FATFโs alarm on stablecoins aims to promote โmore uniform licensing and supervision of stablecoin issuersโ across countries, deployment of real-time monitoring, and closer international collaboration to track, identify and disrupt illicit flows.
โ[The] FATF isnโt calling for a ban on stablecoins. It is calling for visibility and better enforcement,โ Asset Realityโs Larkin said, adding that this fits in with the broader strategy announced in 2023 for increased focus on asset recovery.
โThat means applying the same AML [Anti-Money Laundering] standards used in traditional finance to the digital world,โ Larkin added.
Tracking crimes is only part of the equation
Larkin said that applying advanced blockchain intelligence tools is not enough for mitigating risks behind a mass adoption of stablecoins.
โMonitoring onchain behavior is only part of the equation,โ he said, adding:
โEnforcement in the form of secondary sanctions has been debated by politicians in multiple jurisdictions to place more onus and responsibility on those crypto entities that knowingly facilitate sanctions evasion and use secondary sanctions to pressure compliance […]โ
Chainalysisโ Wain also highlighted stablecoinsโ inherent transparency and traceability, often making them a โpoor choiceโ for any criminal activity. He stressed that centralized stablecoin issuers also retain the ability to freeze funds when they become aware of their illicit use.
Related: Tether blocks $12.3M in USDT tied to suspicious Tron addresses
โWe have seen this capability used to great effect,โ Wain said, referring to Tether freezing and seizing $225 million in its USDt (USDT) stablecoin connected to scam activity at the request of the US authorities in 2023.
ZachXBT flags millions in Circleโs USDC tied to DPRK
Following the FATFโs call for closer scrutiny of stablecoin use by the Democratic Peopleโs Republic of Korea (DPRK), some blockchain investigators have been unpacking onchain data in search of insights.
Crypto sleuth ZachXBT took to X on July 1 to claim that the public stablecoin issuer Circle and its USDC (USDC) stablecoin are the โprimary infra used by DPRK IT workers to facilitate payments.โ
โI can point out high eight figs [figures] in recent volume,โ he said, adding that Circle โcurrently does nothing to detect or freeze the activity while boasting about compliance.โ
Cointelegraph approached Circle for comment regarding the post by ZachXBT but did not receive a response at the time of publication.
Circle froze $57 million in USDC on Solana tied to the Libra team at the request of a US federal court in May.
Related: North Korea crypto hackers tap ChatGPT, Malaysia road money siphoned: Asia Express
