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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 said in a new report urging countries to tighten oversight as stablecoins spread into payments and cross-border transfers.
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. The watchdog called on jurisdictions to assess the risks created by stablecoin arrangements and apply “proportionate” mitigation measures, which can include enhanced monitoring when self-custody wallets interact with regulated platforms and clearer AML and counterterrorism financing obligations for entities involved in issuing and distributing stablecoins.The FATF said P2P transfers via self-custody wallets represent a “key vulnerability” because they can bypass AML controls typically enforced by regulated intermediaries. These transfers occur directly between users without the involvement of virtual asset service providers or financial institutions subject to compliance obligations, limiting authorities’ ability to detect suspicious activity.The FATF noted that transactions on public blockchains remain traceable because activity is recorded onchain. However, the pseudonymous nature of wallet addresses can make attribution more difficult.On Jan. 9, blockchain analytics firm Chainalysis found that illicit crypto addresses received at least $154 billion in 2025, with stablecoins The FATF reiterated the statistic in its report, emphasizing the current usage of stablecoins in illicit transactions.Chainalysis said illicit activity remains a small share of total onchain volume, even as absolute dollar totals have increased.Cointelegraph is committed to independent, transparent journalism. This news article is produced in accordance with Cointelegraph’s Editorial Policy and aims to provide accurate and timely information. Readers are encouraged to verify information independently. Read our Editorial Policy
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