Targeted report on Stablecoins and Unhosted Wallets - Peer-to-Peer Transactions

Paris, 3 March 2026 — A new report from the Financial Action Task Force (FATF) highlights illicit finance risks linked to criminals' misuse of stablecoins, particularly through peer-to-peer (P2P) transactions via unhosted wallets, and sets out recommended actions for countries and the private sector to strengthen controls to protect the integrity of the financial system.

The FATF's Targeted Report on Stablecoins and Unhosted Wallets, highlights that stablecoins have expanded rapidly, with over 250 in circulation by mid-2025 and a market capitalisation exceeding USD 300 billion. Chainalysis has indicated that stablecoins accounted for 84 percent of illicit virtual asset transaction volume in 2025, often involving unhosted wallets and complex laundering techniques designed to obscure fund origins. 

The report highlights how stablecoins' price stability, liquidity, and interoperability support legitimate use but also make them attractive for criminal misuse. This includes by money launderers, and terrorist financiers, as well as by state-linked cybercriminal groups, including from the DPRK, adopting stablecoins as a preferred method for laundering proceeds from ransomware, phishing, and other cyber-enabled crimes, and Iranian actors leveraging stablecoins to finance proliferation.

Vulnerabilities include how P2P transactions via unhosted wallets occur directly between individuals or entities, without the involvement of a regulated intermediary Virtual Asset Service Provider (VASP) or financial institution as well as how stablecoin issuers may face difficulties in controlling cross-chain activities, which may therefore fall outside counter-illicit finance controls.

The report highlights that only a limited number of jurisdictions have implemented targeted regulatory frameworks for entities operating within the stablecoins ecosystem, explicitly taking into account the features that distinguish stablecoins from other virtual assets. 

While the FATF Standards do not require jurisdictions to adopt regulatory frameworks for stablecoin arrangements beyond those already applicable to VASPs, the FATF urges countries to recognise the specific money laundering, terrorist financing and proliferation financing risks associated with stablecoins and to implement proportionate and effective mitigating measures that reflect their distinct characteristics.

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.

In addition, good practices for jurisdictions and the private sector to mitigate the misuse of stablecoins are highlighted, including:

• Requiring stablecoin issuers to adopt risk‑based technical and governance controls, such as the ability to freeze, burn, or withdraw stablecoins in the secondary market, conduct customer due diligence at redemption, and, where appropriate, implement smart contract controls, such as allow‑listing (restricting transactions to pre-approved addresses) and deny‑listing (blocking transactions involving high-risk addresses). 

• Developing strong technical capabilities within supervisory and law enforcement authorities, including expertise in smart contract functionalities, cross-chain transaction mechanics, blockchain analytics tools, and monitoring risks from P2P transactions via unhosted wallets. 

• Ensuring competent authorities have the tools and legal frameworks necessary for swift domestic and international cooperation, including established channels, MoUs and mechanisms that enable rapid information exchange, particularly in cases involving freezing or burning of stablecoins.

• Establishing public‑private partnerships to strengthen cooperation on typologies, risk indicators, and emerging threats, as well as more tactical partnerships for investigations. 

Drawing on more than 50 submissions from across the FATF Global Network, the report also highlights case studies demonstrating how new technologies and blockchain analytical tools, along with other risk mitigation measures, have been used to detect and disrupt illicit activity involving stablecoins.