FATF Urges Global Oversight on Stablecoins Amid Risks

The Financial Action Task Force (FATF) has called on governments worldwide to tighten oversight of the digital asset sector, citing a rise in criminal activities utilizing stablecoins for illicit funding. In its seventh annual report, FATF highlighted that Nigeria accounts for 60% of stablecoin inflows in Sub-Saharan Africa.

The International Monetary Fund (IMF) acknowledged that while digital assets lower cross-border transaction costs, their rapid adoption poses risks to the naira's sovereignty. The IMF recommended that Nigerian authorities establish a regulatory framework for stablecoins and virtual assets to align with domestic rules and international standards.

The Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) were urged to improve monitoring of crypto asset transactions to mitigate money laundering and illicit financing risks. FATF's review indicated that 83% of surveyed jurisdictions have incorporated the travel rule into their legal frameworks, but enforcement remains uneven, particularly in cross-border transactions.