FATF Issues Guidance on Virtual Assets Including Stablecoins

In October 2021, the U.S. Financial Action Task Force (the “FATF”) issed Updated Guidance for a Risk Based Approach to Virtual Assets and Virtual Asset Providers and a summary of the guidance. In addition to a number of other updates, Part Two, Box 1, deals with so-called stablecoins. Stablecoins purport to maintain a stable relationship between the value of a coin and some reference asset, such as a fiat currency; fluctuations in value have led to some wariness in the market with respect to non-stableĀ  cryptocurrencies. The FATF sees high money laundering and terrorist financing risks of stablecoins because while they have characteristics of virtual assets they are also relatively stable and therefore may be mass-adopted. Stablecoins can also be more centralized – in which case in the United State the FATF has insight into them – or more decentralized.