The international watchdog says P2P stablecoin transfers via self-custody wallets can bypass AML checks and urges countries to assess risks and apply proportionate safeguards.
Peer-to-peer transfers made through self-custody crypto wallets are a key weak point in the stablecoin ecosystem because they can take place without a regulated intermediary, the Financial Action Task Force (FATF) said in a new report urging countries to tighten oversight as stablecoins spread into payments and cross-border transfers.
In its report on stablecoins, unhosted wallets and P2P transactions, the global anti-money laundering watchdog said transactions conducted directly between users through unhosted wallets can occur without regulated intermediaries such as exchanges or custodians.
The FATF said this structure can create gaps in Anti-Money Laundering (AML) oversight because the transactions occur outside the attention of entities required to monitor activity and report suspicious transfers. The report highlighted growing regulatory attention on stablecoins as their use expands across trading, payments and cross-border transfers.Â
