DIGITAL ASSETS
With stablecoins facilitating £ 30bn( US $ 40.3bn) in illicit transactions whilst embedding the dollar deeper into digital finance, how do we balance innovation opportunities against reputational risks of adoption?
Anthony Yeung, CCO at CoinCover Between 0.14 % and 0.2 % of stablecoin transactions are flagged as potentially illicit. Stablecoins therefore still have some way to go to reach the levels of cash, 30 % of which some sources estimate to consist of illicit transactions, or the 2.7 % of global GDP estimated to be involved in money laundering.
Nonetheless, regulatory-compliant stablecoin adoption comes with the same AML and KYC considerations as fiat currency and, indeed, cash – in order to mitigate regulatory and reputational risk.
Retno Widuri, Head of Crypto, at Unlimit Yes, stablecoins have facilitated illicit flows – but so have cash and wire transfers. £ 30bn( US $ 40.3bn) is not insignificant, but this represents a fraction of global illicit finance. The solution isn’ t sitting out of the market, it’ s building compliance-grade custody and real-time KYC into crypto rails.
The opportunity that digital finance presents, for B2B payments in particular, is far too large to ignore. This is the moment for licensed, regulated players to lead in setting the standard for safe, scalable on- and off-ramp infrastructure. The balance lies in transparency and monitoring – as stablecoins move on public ledgers, financial institutions can use advanced on-chain analytics to trace flows, flag suspicious activity, and see risks in real-time. When implemented correctly, this can transform on-chain rails into a regulatory and reputational advantage.
Ignore stablecoins, and you risk irrelevance as customers and corporates migrate to faster, tokenised rails. Adopt them blindly, and you open yourself to compliance failures and brand damage. The winners will be those who combine adoption with discipline.
Jeremy McDougall, Strategic Solution Consulting Director at ACI Worldwide A cautious, balanced approach is essential. Stablecoins remain in a regulatory grey zone and pose systemic risks, including potential destabilisation of local currencies and economic liquidity. However, innovation should not be stifled by fear. Reputational risk is not just about exposure to illicit activity; it’ s about public trust. Financial institutions adopting stablecoinrelated technologies must demonstrate proactive risk management, ethical alignment, and a commitment to financial integrity. Innovation without trust is unsustainable.
fintechmagazine. com 71