If cash were invented today, it would be illegal to use.
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The Financial Action Task Force (FATF) highlights the prohibiting or denying of licenses to platforms that allow transfers to "unhosted wallets" as a measure to combat illicit finance risks, per its latest report.
The report recommends that identity verification be required before any "unhosted wallet" can transact — and that issuers proactively monitor the location and use of their stablecoins in the secondary market, meaning after they leave the issuer entirely.
It further recommends that governments require stablecoin issuers to embed blacklists, whitelists, and freeze functions directly into their smart contracts.
