A recent alert from the Financial Action Task Force (FATF) regarding the surge in stablecoin-related crimes is not a threat to the broader cryptocurrency sector, according to leaders at blockchain intelligence companies.
Executives from Chainalysis and Asset Reality emphasized that the FATF’s warning highlights the need for stronger oversight and analysis of stablecoin activity, rather than an attempt to stifle innovation or growth in the crypto space.
On Thursday, the global financial watchdog urged regulators to take action to mitigate risks associated with the potential large-scale adoption of stablecoins.
“This isn’t anti-crypto—it’s an acknowledgment that sustainable growth and trust rely on effective regulation,” said Aidan Larkin, co-founder of Asset Reality.
Stablecoins Account for 63% of Illicit Cryptocurrency Transactions
“Stablecoins have become the primary crypto asset used both for transferring value and for carrying out illicit activities,” said Jordan Wain, policy adviser at Chainalysis. He referred to findings from the firm’s “2025 Crypto Crime Report,” which showed that 63% of all on-chain illicit transaction volumes involved stablecoins.
Wain explained that the FATF’s warning is intended to encourage more consistent global licensing and oversight of stablecoin issuers, along with the implementation of real-time monitoring tools and enhanced international cooperation to trace and disrupt illegal financial flows.
“The FATF isn’t advocating for a ban on stablecoins—it’s calling for greater transparency and stronger enforcement,” said Aidan Larkin, co-founder of Asset Reality. He noted that this aligns with the broader 2023 strategy emphasizing improved asset recovery.
“It’s about applying the same Anti-Money Laundering (AML) standards from traditional finance to the digital asset space,” Larkin added.
Tracking criminal activity is only one piece of the puzzle
Larkin emphasized that using advanced blockchain intelligence tools alone isn’t sufficient to address the risks tied to the widespread adoption of stablecoins.
“Monitoring on-chain activity is just one part of the equation,” he said, adding:
“Enforcement 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 […]”
Jordan Wain of Chainalysis also pointed out that stablecoins offer a high degree of transparency and traceability, making them a “poor choice” for illicit activity. He noted that centralized stablecoin issuers have the ability to freeze funds when they detect criminal use.
“We’ve seen this power used effectively,” Wain said, citing the example of Tether freezing and seizing $225 million worth of its USDt stablecoin in 2023, following a request from U.S. authorities in connection with a scam investigation.
ZachXBT Flags Millions in Circle’s USDC Linked to North Korea
In response to the FATF’s call for heightened oversight of stablecoin use by the Democratic People’s Republic of Korea (DPRK), blockchain analysts have begun examining on-chain data for potential links.
On Tuesday, prominent crypto investigator ZachXBT claimed on X that Circle’s USDC stablecoin is the “primary infrastructure used by DPRK IT workers to process payments.”
“I can identify high eight figures in recent transaction volume,” he stated, accusing Circle of failing to detect or freeze suspicious activity despite promoting its compliance efforts.
In May, Circle froze $57 million worth of USDC on the Solana blockchain linked to the Libra team, following a request from a U.S. federal court.
