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[ Paris, France, April 23, 2025] AnChain.AI joined global regulators, analytics providers, and law enforcement leaders at the FATF Virtual Asset Contact Group (VACG) meeting to address the growing role of stablecoins in the global financial ecosystem. While stablecoins offer faster payments, increased price stability, and reduced remittance costs, their increasing ubiquity has also exposed design vulnerabilities that criminals are quick to exploit.
The very features that make stablecoins attractive for legitimate users—programmability, liquidity, and interoperability—are now being leveraged by bad actors at a rapidly increasing scale. The AnChain.AI team, having spearheaded multiple landmark investigations involving stablecoins including Crema Finance and Kyberswap, delivered a powerful message in light of this growing undercurrent of misuse: stablecoins are not just digital dollars—they are increasingly utilized as vehicles for financial crime, and already facilitating billions of dollars in laundered funds every year.
This duality necessitates a sophisticated regulatory response, an AI technology enabled approach to compliant stablecoin adoption.
Presented by AnChain.AI’s David Lum, retired from the IRS Criminal Investigation, the session centered around a stark warning:
“Stablecoins are the new offshore cash. Despite the trust their name inspires, their design is far from standardized—and their misuse is rapidly evolving.”
The AnChain.AI team drew particular attention to the fact that, while centralized stablecoins like USDC and USDT offer some blacklist and freeze functions, decentralized and hybrid models such as DAI and USDH lack basic AML safeguards. Worse, these “compliance-optional” stablecoins are already being adopted by organized crime networks, illicit junkets, and state-linked syndicates—particularly in Southeast Asia.
In an extended Q&A with leading global regulators, AnChain.AI CEO, Dr. Victor Fang addressed inquiries on the intersection of AI and smart contracts. His response revealed a chilling reality:
“Hackers are already using AI copilots to engineer exploits. Some of the multimillion-dollar hacks you’ve seen recently? AI-assisted.”
AnChain.AI also shared how its Agentic AI and Retrieval-Augmented Generation (RAG) model is already assisting law enforcement in real-time smart contract investigations—an approach still largely missing in the private sector.
While regulators often focus on wallet blacklists and transaction monitoring, the AnChain.AI team places additional emphasis on the unseen risk hiding in plain sight: the smart contract code itself.
The firm shared detailed forensic analysis of the USDC, USDT, and USDH smart contracts—showing that while the former can blacklist addresses, USDH offers zero AML features. Its rapid rise in illicit finance highlights the urgent need for design standards at the smart contract level, not just issuer compliance.
Several themes emerged from open discussion:
AnChain.AI responded with cautious optimism: while full data-sharing may be difficult due to competitive interests, standardized labeling and shared threat ontologies could pave the way for industry-wide collaboration.
The AnChain.AI team closed with a clear message:
We must treat stablecoins as the financial backbone of cybercrime in 2025 and beyond. Regulation must address not only the issuer—but also the underlying code at the point of issuance.
As the landscape shifts from coins to code, the FATF’s next move could set the tone for the future of digital finance enforcement for decades to come.
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