The FATF organization continues to tighten oversight on stablecoins and decentralized finance (DeFi) in response to the growing use of these technologies in criminal activities. Issues with compliance have been identified in various jurisdictions.
FATF's Anti-Money Laundering Guidelines
Only The Bahamas is fully compliant with the FATF's anti-money laundering standards, while many countries have moved closer to meeting them. Despite the rising scrutiny, enforcement remains weak, with only four jurisdictions registering DeFi entities.
Risks of Stablecoins and DeFi
According to FATF, stablecoins and DeFi remain high-risk zones, notably due to the increasing illicit use by actors linked to North Korea.
Global Response to FATF's New Measures
Singapore and Hong Kong are rapidly moving to tighten controls. Unlicensed exchanges in Singapore face shutdowns, while Hong Kong has advanced stablecoin legislation. FATF warns that outright bans often fail to reduce crypto activity and can lead to diminished oversight.
New FATF reports on stablecoins, DeFi, and offshore platforms are expected next year and are likely to shape the next wave of global crypto regulation.
