So-called stablecoins have the potential to spur financial innovation and efficiency and improve financial inclusion. While stablecoins have so far only been adopted on a small-scale, new proposals have the potential to be mass-adopted on a global scale, particularly where they are sponsored by large technology, telecommunications or financial firms.
In the same way as any other large-scale value transfer system, this propensity for mass-adoption makes them attractive to criminals and terrorists to launder their proceeds of crime and finance their terrorist activities.
FATF’s report presents its views on stablecoins and addresses the following:
- what the characteristics are (Section 1)
- what the money laundering and terrorist financing risks are (Sections 2 and 4)
- how the FATF Standards apply to stablecoins and the different businesses involved (Section 3); and
- how the FATF plans to enhance the global anti-money laundering and counter-terrorism financing framework for virtual assets and stablecoins (Section 5)
The FATF calls on all jurisdictions to implement the revised FATF Standards as a matter of priority. The first step to ensuring an effective global response to so-called stablecoins, and virtual assets more broadly, is ensuring that the FATF’s pre-existing standards are transposed into domestic law and operationalized.