The Financial Action Task Force (FATF) warns that peer-to-peer (P2P) stablecoin transactions through self-custody wallets are a significant blind spot in the cryptocurrency ecosystem, as they can occur without managed intermediaries. In a recent report, FATF states that transactions between unhosted wallets may fall outside anti-money laundering (AML) oversight because they do not involve exchanges or custodians obligated to comply.
The agency urges countries to assess the risks associated with the stablecoin model and implement proportionate mitigation measures, including increased oversight when unhosted wallets interact with licensed platforms, as well as clarifying AML and counter-terrorism financing obligations for stablecoin issuers and distributors.
According to Chainalysis data, illegal addresses received at least $154 billion in cryptocurrency in 2025, with stablecoins accounting for 84% of illicit transaction value. However, total illegal transactions still account for less than 1% of the entire on-chain volume.
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