So-called stablecoins have the potential to spur financial innovation and efficiency and improve financial inclusion. While so-called 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.
In October 2019, the G20 asked the FATF to consider the anti-money laundering and counter-terrorism financing issues relating to so-called stablecoins. This report sets out the FATF’s views on so-called stablecoins and addresses the following:
- what the characteristics of so-called stablecoins are (Section 1)
- what the money laundering and terrorist financing risks of so-called stablecoins are (Sections 2 and 4)
- how the FATF Standards apply to so-called stablecoins and the different businesses involved in the so-called stablecoin (Section 3); and
- how the FATF plans to enhance the global anti-money laundering and counter-terrorism financing framework for virtual assets and so-called stablecoins (Section 5).
This report was completed simultaneously with a 12-month review of the implementation of revisions to the FATF Standards. In June 2019, the FATF strengthened its Standards to clarify the application of anti-money laundering and counter- terrorist financing requirements on virtual assets and virtual asset service providers. The FATF’s 12-month review of these revisions complement the findings of this report. In particular, 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.
Source: FATF (7 July 2020)