The Financial Action Task Force (FATF) is calling for jurisdictions to consider whether stablecoin issuers ‘should be required to proactively monitor the location and use of their stablecoins in the secondary market’.
In a March 2026 ‘Targeted Report on Stablecoins and Unhosted Wallets’, the FATF indicated that there were over 250 stablecoins in circulation by mid-2025, with market capitalization ‘exceeding $300 billion’.
A Chainalysis report cited by the FATF notes 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’.
While the report is critical of the ‘criminal misuse’ of stablecoins, it highlights their ‘price stability, liquidity, and interoperability’, which ‘support legitimate use’.
The body is particularly concerned with peer-to-peer transfers of stablecoins and ‘how stablecoin issuers may face difficulties in controlling cross-chain activities, which may therefore fall outside counter-illicit finance controls’.
The FATF Standards do not currently require jurisdictions to adopt regulatory frameworks for stablecoin arrangements beyond those already applicable to Virtual Asset Service Providers (VASPs).
However, it is suggesting measures for both jurisdictions and the private sector.
Stablecoin use on the rise in iGaming
As regulatory frameworks have improved, the iGaming sector has been quick to adopt more stablecoin use. The advantage of having a relatively reliable value has prompted operators to think beyond stablecoins as a gambling currency and start to adopt it for internal processes also – handling deposits, settlements and payouts, and even employee salaries.
They’ve also proven highly popular as bonuses and incentives.
Amongst the growth in use, the varying know your customer (KYC) protocols in place and laxity in certain jurisdictions and by certain operators has the FATF concerned.
Amongst the concerns are that iGaming platforms can be used to launder money through stablecoin use. One case study highlighted by the FATF noted that a VASP in France found the ‘use of online casinos by individuals whose gambling activity appeared inconsistent with their customer profile or declared source of funds. Additionally, the rapid conversion of gambling winnings into stablecoins without economic purposes suggests an attempt to obfuscate the source of funds’.
While concerns over misuse of online casinos for money laundering is valid, one primary reason for the use of cryptocurrencies – aside from transfer speed, lower costs and easy convertibility – is also its relative anonymity. And this is something the FATF is not a fan of.
Freeze, burn, or withdraw
Amongst the technical and governance controls that the FATF would like to see stablecoin issues follow are ‘the ability to freeze, burn, or withdraw stablecoins in the secondary market’. This would effectively mean that the issuer could be called upon to halt a transfer, eliminate the stablecoins involved or even withdraw them to another wallet if a transaction, sender or receiver is deemed suspicious.
But the suggestions don’t stop there, the financial watchdog is also seeking to mandate that issuers ‘conduct customer due diligence at redemption’-to track exactly who is receiving coins and attach a valid identity to the transaction.
Further suggestions are for smart contract controls, such as ‘allow-listing (restricting transactions to pre-approved addresses) and deny-listing (blocking transactions involving high-risk addresses)’.
And for any new stablecoin issuers, the FATF is suggesting that jurisdictions ‘should institutionalize rigorous pre-launch and pre-licensing supervision and compliance reviews to mitigate stablecoin money laundering/terrorist financing risks before launch’.
For now, the FATF is merely making suggestions to jurisdictions and issuers to ensure that financial flows comply with AML/CTF measures aimed at making the world safer. But the potential for overzealous enforcement and oversight of the use of digital currencies does exist. Legitimate and compliant iGaming operators would be the first ones to lose out if enforcement goes too far, as transactions would simply shift to the black market, a highly-complex and organized ecosystem that is ever-ready to dodge regulations.
