Most illegal activity happening on cryptocurrency ledgers now involves the tokens known as stablecoins, according to a report released on Thursday by an intergovernmental body that develops policies to protect the global financial system against money laundering and terrorist financing.
The findings in the new report from the Financial Action Task Force land just as US lawmakers and businesses are pushing for the wider distribution of stablecoins, crypto tokens that are pegged to the dollar or some other national currency.
The task force, which brings together officials from most of the biggest countries in the world, found that a wide array of illicit actors — including terrorists, drug traffickers and North Korean hackers — have stepped up their use of stablecoins since the group’s last report on digital assets in 2024.
The so-called “Genius Act” that was recently passed by the US Senate aims to normalise stablecoins by bringing them under a more standardised and rigorous regulatory regime than they have faced until now. This has led numerous companies to push forward with initiatives that would give consumers access to stablecoins and knit them into the traditional financial industry.
The issuer of the USDC token, Circle Internet Group, went public in early June and its share price has risen more than sixfold since then. A company tied to President Donald Trump’s family, World Liberty Financial Inc., has released its own stablecoin project.
Some critics of stablecoins have said that the tokens are a poor substitute for standard currencies and unlikely to gain traction outside the crypto industry. Earlier this week, a report from the Bank for International Settlements said the tokens “may eventually play a subsidiary role in the hinterland of the financial system if adequately regulated.”
The Financial Action Task Force, in its report, said that if stablecoins gain more widespread use in so-called “unhosted wallets,” outside the reach of financial institutions, it will potentially make it easier for criminals to evade detection in ways that “could amplify illicit finance risks.”
“The perceived reduction in volatility, transaction efficiency with low costs, and abundant liquidity in the market that make stablecoins attractive to many consumers and businesses also draw in criminals seeking to maximise profits and reduce their costs,” the report said.
The report singled out the use by illicit actors of the largest stablecoin, Tether Holdings’ USDT, on the ledger tied to the Tron cryptocurrency. The report also noted a “significant uptick” in the use of other digital assets in frauds and scams, and said that one industry participant had estimated “there was approximately $51 billion (roughly Rs. 4,36,214 crore) in illicit on-chain activity relating to fraud and scams in 2024.” Tether did not respond to a request for comment.
While government oversight of digital assets has improved, “big gaps remain” in making sure they don’t end up being used by terrorists and criminals, the report said. It called for governments to increase and enhance their licensing and registration of virtual asset companies and pointed to the ongoing challenges in identifying people and organisations running decentralised blockchain applications, which offer everything from lending to gaming.
The task force, a standard-setting body that has no legal enforcement powers, began recommending standards for governments to apply to digital assets in 2019. It aims to release a report on stablecoins early next year and plans to propose new measures that governments can take to protect against illegal activity.
© 2025 Bloomberg LP
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