The international Financial Action Task Force announced it sees high risks of using stablecoins in money laundering and terrorist financing. FATF calls for stronger industry regulation.
The intergovernmental organization that designs and promotes policies and standards to combat financial crime issued a report on stablecoins. The organization said that stablecoins can be used for money laundering and terrorist financing.
“If stablecoins were to become widespread, it could potentially lead to new risks regarding money laundering and terrorist financing,” said FATF President Xiangmin Liu earlier. “It is our job to ensure the new risks in connection with stablecoins will be adequately addressed.”
In particular, the report refers to the possibility of acquiring stablecoins and performing cross-border operations anonymously with their help.
The intergovernmental group sees high risks of proliferation of these virtual assets and recommends that all jurisdictions develop standards for regulating new digital currencies. The FATF believes that regulators need to implement standards that prohibit transactions in stablecoins without proper identification.
The report mentions several digital assets, according to FATF experts, which meet the criteria for stablecoins. These are Tether, USD Coin and Paxos, as well as Libra from Facebook and Gram from Telegram, which were never launched.
Although the number of stablecoins is still limited, their attachment to the rate of fiat currencies can make them more popular than some existing virtual assets, especially if they are sponsored by large technology, telecommunications or financial companies.
The FATF said it will consider ways to implement and apply its standards for regulating stablecoins and will publish recommendations not later than next summer.