Peer-to-peer transfers made through self-service cryptocurrency wallets are a key weakness in the stablecoin ecosystem because they can take place without a regulated intermediary, the Financial Action Task Force (FATF) said in a fresh report calling on countries to tighten supervision as stablecoins spread into cross-border payments and transfers.
In its report on stablecoins, unhosted wallets and P2P transactions, the global anti-money laundering watchdog he said transactions conducted directly between users via unhosted wallets can occur without regulated intermediaries such as exchanges or custodians.
The FATF said this structure could create gaps in anti-money laundering (AML) supervision because transactions take place outside the control of entities obliged to monitor activity and report suspicious transfers. The report highlighted growing regulatory interest in stablecoins as their apply increases in trade, payments and cross-border transfers.
The watchdog urged jurisdictions to assess the risks posed by stablecoin arrangements and apply “proportionate” mitigating measures, which could include enhanced monitoring of self-service wallets’ interactions with regulated platforms and clearer anti-money laundering and counter-terrorism financing obligations for entities involved in the issuance and distribution of stablecoins.
P2P stablecoin transfers are seen as a regulatory blind spot
The FATF said P2P transfers via self-service wallets pose a “key vulnerability” because they can bypass AML controls typically enforced by regulated intermediaries.
These transfers take place directly between users, without the involvement of virtual asset service providers (VASPs) or financial institutions subject to compliance obligations, limiting authorities’ ability to detect suspicious activity.
Related: Stablecoins, sanctions and supervision: why 2025 has changed the regulatory reality of cryptocurrencies
The FATF noted that transactions on public blockchains remain traceable because activity is recorded on the blockchain. However, the pseudonymous nature of wallet addresses can make them complex to assign.
Related: France arrests six suspects in connection with the kidnapping of a judge for crypto ransom
Illegal activity accounts for only 1% of the total cryptocurrency transaction volume
On January 9, blockchain analytics firm Chainalytic found that illicit crypto addresses received at least $154 billion in 2025, with stablecoins accounting for 84% of illicit transaction volume.
The FATF repeated this statistic in its report, highlighting the current apply of stablecoins in illicit transactions.
Chainalytic found that illicit activity remains a diminutive share of total onchain volume, even as absolute dollar amounts escalate.
In the same report, Chainalytic stated that illegal transactions accounted for less than 1% of the total cryptocurrency transaction volume.
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