Over the past several years, stablecoins have become a cornerstone of the digital asset ecosystem. Whether facilitating liquidity on exchanges, powering decentralized finance (DeFi), or serving as a bridge between fiat and crypto markets, stablecoins are no longer a niche product—they are infrastructure.
At the same time, they have become a focal point for policymakers, regulators, and law enforcement—rightly so.
You’ve likely seen the statistic repeated in industry reports and media coverage: a significant share of illicit cryptocurrency activity—often cited at ~80–90% depending on methodology and timeframe—is associated with stablecoins. While the exact percentage can vary depending on the dataset and analytics provider, the directional takeaway is clear:
That reality has not gone unnoticed.
Between legislative efforts like the GENIUS Act, increased regulatory scrutiny, and enhanced blockchain analytics capabilities, stablecoins are firmly in the crosshairs.
But here’s the issue:
While there is no shortage of commentary highlighting the risks, there is a noticeable gap in actionable, operational compliance best practices for crypto companies.
“Screen better.”
“Enhance AML controls.”
“Monitor transactions more closely.”
Or, just as often, criticism and blame redirected at stablecoin issuers—thinly disguised as analysis:
“Be more cooperative with law enforcement.”
“Block illicit transactions.”
All true. All necessary.
But also—not nearly specific enough.
At BitAML, we’ve always taken a practical, risk-based approach. And in that spirit, this article focuses on what crypto companies should actually do to address AML risk associated with stablecoins—beyond the basics. (We’ll explore what stablecoin issuers should do in Part 2 of this short series.)
We also recognize that we don’t have a monopoly on good ideas. If you’ve authored or come across thoughtful, substantive work in this area, we welcome it. This is a rapidly evolving space, and the best outcomes will come from shared insight and collaboration.
A foundational principle of any AML program is the risk-based approach. Resources should be allocated where risk is greatest.
Stablecoins present unique characteristics that elevate their risk profile:
Stablecoins—particularly USD-pegged assets—remove volatility and create psychological and functional equivalence to fiat currency. This makes them more attractive for illicit actors seeking predictability.
Stablecoins are widely accepted across exchanges, DeFi protocols, OTC desks, and cross-border transactions. Their interoperability makes them efficient vehicles for layering and movement of funds.
Transactions settle quickly, often irreversibly, and across jurisdictions—complicating recovery and enforcement efforts.
Stablecoins frequently intersect with:
There is broad agreement on the following:
Where the industry falls short is in translating that awareness into granular, operational controls.
Let’s change that.
Too many monitoring systems treat stablecoins similarly to other crypto assets. That’s a mistake.
Stablecoins behave differently—and your controls should reflect that.
Because not all cryptocurrencies are created equal, neither is their risk profile. If stablecoins pose a (much higher level of risk, why wouldn’t we lower the dollar-denominated threshold and apply other more conservative thresholds than that of other coins. In fact, some crypto companies may already be applying more conservative thresholds to privacy coins.
Practical steps:
Stablecoin misuse often appears in patterns, not just single transactions.
Focus on:
One of the most overlooked opportunities in transaction monitoring is alert correlation.
For example:
Individually, these may not trigger escalation.
Together, they should.
Oh, and don’t forget to continue tuning those alert routines.
Stablecoin activity should influence customer risk ratings more directly.
Customers heavily transacting in stablecoins—especially at scale—should receive:
Not all stablecoin activity is equal. Focus on:
Enhanced Due Diligence is often where AML programs either succeed or fail.
Stablecoins raise the bar.
Particularly for:
EDD should include:
The term “OTC desk” in crypto is often loosely defined.
It can range from:
Action item:
Do not rely on labels—verify substance.
Stablecoin exposure can change rapidly.
EDD should be:
Every crypto company should already have a coin/token due diligence policy in place.
This is often overlooked or treated as a checkbox exercise.
It shouldn’t be.
Your policy should evaluate:
Not all stablecoins carry the same risk.
For example:
This is critical.
Your policy should explicitly answer:
“What additional controls apply when customers transact in this specific digital asset?”
Examples:
Most firms use blockchain analytics tools.
Fewer use them strategically.
Focus on:
Indirect exposure matters.
For example:
Ensure your analytics provider’s risk scoring:
Stablecoins often act as a bridge between fiat and crypto.
This creates risk at entry and exit points.
Pay close attention to:
Watch for:
Regulators are increasingly focused on how firms operationalize risk-based controls.
Be prepared to explain:
Legislation like the GENIUS Act signals where things are headed:
This includes:
Even the best controls fail without proper execution.
Ensure teams understand:
Use:
No single firm has a complete view of risk.
Collaboration across:
If you’ve developed effective controls or identified new typologies:
Stablecoins are not going away.
If anything, their role will continue to expand—particularly as regulatory frameworks evolve and institutional adoption grows.
The conversation around stablecoin risk is no longer about whether they pose AML challenges. That’s settled.
The real question is:
What are you doing about it—specifically?
A risk-based approach demands prioritization.
And today, that means giving stablecoins the attention—and controls—they warrant.
At BitAML, we believe the industry benefits from moving beyond high-level observations to practical implementation.
We also recognize that this is a shared effort.
If you’ve written or read thoughtful, substantive work on this topic, we encourage you to share it. The more we collectively refine our approaches, the stronger the ecosystem becomes.
Interested in strengthening your AML program for stablecoin risk?
BitAML works with crypto companies, financial institutions, and policymakers to design, test, and enhance compliance frameworks tailored to real-world risks.
Contact us at info@bitaml.com to learn more.
In Part 1 of this series https://blog.bitaml.com/2026/04/08/stablecoins-aml-risk-moving-beyond-the-headlines-to-practical-controls-for-crypto-companies-part-1-of-2/, we focused on what crypto platforms should do to address AML risks associated with stablecoins. The core takeaway
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