Global “stablecoins” and their service providers should “never be outside the scope of anti-money laundering controls,” the international group of regulators that sets standards for combating money laundering, terrorist financing, and other illicit activities said Friday.
In a statement, the Financial Action Task Force (FATF) – which includes the U.S. and its federal financial regulators as members – said “stablecoins” and their proposed global networks and platforms could “potentially cause a shift in the virtual asset ecosystem” and have implications for money laundering and terrorist financing risks.
“Stablecoins” have been defined as a type of crypto-asset that attempts to address volatility by tying its value to conventional assets, such as the value of the U.S. dollar or another basket of currencies. The proposed “Libra” digi-currency by Facebook is an example of the exchange medium, according to federal regulators; Gemini Dollar is cited as the first regulated stablecoin.
“There are two concerns: mass-market adoption of virtual assets and person-to-person transfers, without the need for a regulated intermediary,” the FATF said in its statement. “Together these changes could have serious consequences for our ability to detect and prevent money laundering and terrorist financing.”
The group stated that in general terms, both global “stablecoins” and their service providers would be subject to the FATF standards either as virtual assets and virtual asset service providers or as traditional financial assets and their service providers.
The group said that it is actively monitoring emerging assets including global “stablecoins” and will continue to examine the characteristics and risks of the exchanged media. The group said it would consider further clarifications on how its standards apply to global “stablecoins” and their service providers, as well as whether further updates are necessary.
“National authorities are responsible for implementing AML/CFT rules in their jurisdiction, through national laws and regulations. The FATF will work to promote effective global implementation of its standards as they apply to virtual assets and other emerging assets,” the group said.