FATF Report on Stablecoins and Self-Hosted Wallets – New Regulatory Challenges for the Crypto-Asset Market

The Financial Action Task Force (FATF) has published the Targeted Report on Stablecoins and Unhosted Wallets- Peer-to-Peer Transactions, drawing attention to the growing risks associated with the use of stablecoins and self-hosted wallets in illicit financial flows. At the same time, the organisation calls for stronger regulatory oversight of the virtual asset market.

The report confirms that the rapid development of stablecoins is reshaping the structure of digital asset markets and payment systems. According to FATF, there are currently more than 250 stablecoin projects globally, and their combined market capitalisation exceeded USD 300 billion in mid-2025. Stablecoins are widely used due to their perceived price stability, liquidity and efficiency in cross-border transactions, making them an increasingly important component of global digital payment infrastructure.

Stablecoins, Peer-to-Peer Transactions and Self-Hosted Wallets – New Financial Risks

At the same time, FATF stresses that the same characteristics that make stablecoins attractive for legitimate use may also facilitate financial crime. Data cited in the report indicates that approximately 84% of the volume of illicit virtual asset transactions in 2025 involved stablecoins. A significant share of such transactions takes place in a peer-to-peer environment, often involving self-hosted (unhosted) wallets.

Self-hosted wallets allow users to store and transfer virtual assets without relying on regulated intermediaries such as virtual asset service providers (VASPs). As a result, these transactions may fall outside traditional AML/CFT safeguards applied by regulated entities, including customer due diligence (CDD) procedures and transaction monitoring mechanisms.

Stablecoins in Cybercrime and Money Laundering

The report also highlights the growing role of stablecoins in cyber-enabled financial crime. Criminal organisations- including ransomware groups and state-affiliated cyber actors- increasingly rely on stablecoins to launder illicit proceeds and circumvent international sanctions regimes. FATF refers in particular to cases involving cybercrime groups linked to North Korea that have used stablecoins as part of sophisticated laundering schemes.

Cross-Chain Transactions and Blockchain Interoperability as a Regulatory Challenge

From a regulatory perspective, FATF also draws attention to the increasing importance of cross-chain transactions and interoperability between different blockchain networks. These developments may significantly complicate the monitoring of financial flows and the detection of suspicious activity across the virtual asset ecosystem.

Regulatory Implications of the FATF Report for the Fintech Sector and the Crypto-Asset Market

In response to these risks, FATF calls on jurisdictions to strengthen the implementation of global AML/CFT standards, particularly FATF Recommendation 15, which extends anti-money laundering obligations to virtual assets and virtual asset service providers. The organisation also emphasises the need for greater regulatory consistency across jurisdictions and stronger cooperation between regulators and the private sector.

For fintech companies, crypto-asset service providers and financial institutions, the report sends a clear regulatory signal. Supervisory authorities are likely to focus increasingly on stablecoin transaction monitoring, peer-to-peer activity involving self-hosted wallets and the robustness of compliance frameworks implemented by VASPs.

In practice, this may lead to stricter transaction monitoring requirements, further clarification of regulatory obligations for digital asset market participants and increased supervisory scrutiny of stablecoin ecosystems.

As jurisdictions continue to align their regulatory frameworks with FATF standards, stablecoins and decentralised transaction models are expected to remain a key focus of global AML/CFT supervision in the coming years.

Stablecoins and Self-Hosted Wallets – What Do They Mean for the Regulation of the Crypto-Asset Market?

The findings of the FATF report indicate growing supervisory focus on stablecoin transactions, peer-to-peer transaction models and the use of self-hosted wallets. For fintech companies, crypto-asset service providers and financial institutions, this may translate into stricter requirements for transaction monitoring and AML/CFT compliance frameworks.

If you would like to assess how these emerging regulatory trends may affect your operations in the virtual asset sector, we invite you to contact our team.