A global watchdog group, the Financial Action Task Force (FATF), is sounding the alarm about the increasing use of stablecoins and other cryptocurrencies for illegal activities. They’re worried that this is a serious threat to global financial security.
Criminals Love Stablecoins
The FATF’s June 26th press release highlighted the growing problem of bad actors – including North Korean hackers, terrorist financiers, and drug traffickers – using stablecoins to move money. A significant portion of online criminal activity now involves these digital currencies. The widespread adoption of stablecoins could make this problem much worse, especially since different countries have different rules about them.
Cryptocurrency Thefts are Skyrocketing
The report also points to some alarming statistics. For example, only a tiny fraction (3.8%) of the $1.46 billion stolen by North Korean hackers from the Bybit cryptocurrency exchange has been recovered. There’s also been a huge increase in scams and fraud involving digital assets, making things even harder to regulate. In the first three months of the year alone, cryptocurrency thefts jumped a whopping 303%, reaching $1.67 billion.
What’s the FATF Doing?
To combat this, the FATF is urging governments to improve how they license and register companies that deal with virtual assets (VASPs). This includes better identification of those involved, managing risks from offshore VASPs, and improving transparency in cross-border payments. Because cryptocurrencies are global, problems in one country can quickly spread everywhere.
The Bigger Picture: Crypto Hacks and Stablecoin IPOs
While 2024 saw $2.2 billion stolen through crypto hacks (down from a record $3.7 billion in 2022), the increase in thefts is still a major concern. Interestingly, despite the risks, the IPO of Circle (the company behind USDC, a major stablecoin) has been incredibly successful, with its stock price soaring over 200% in just three weeks.