FATF Demands Stricter Crypto Oversight Amid Stablecoin Illicit Use

The Financial Action Task Force (FATF) has urged countries to tighten oversight of the digital asset sector, warning that criminals are increasingly using stablecoins to move illicit funds.

The global anti-money laundering watchdog released its seventh annual Targeted Update on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers, which found that 83% of surveyed jurisdictions had incorporated the Travel Rule into their legal frameworks.

However, enforcement remains uneven, particularly for cross-border crypto transactions. The FATF called for greater international progress on regulatory, licensing, and registration regimes to counter digital dollarization, a phenomenon where local currencies are replaced by stablecoins like USDT or USDC.

The International Monetary Fund (IMF) recently warned that Nigeria accounted for 60% of stablecoin inflows into sub-Saharan Africa, threatening the naira's sovereignty. The IMF recommended bringing stablecoin activities within the established regulatory framework and maintaining a credible domestic currency to counter digital dollarization.