hot take: wallet screening is compliance theater if 84% of illicit volume never touches a VASP

FATF's new stablecoin report: 84% of illicit crypto transaction volume in 2025 ran through stablecoins, mostly P2P between unhosted wallets. no VASP in the middle.

Every crypto compliance stack i've worked with was built around the opposite assumption, exchange-to-exchange flows, withdrawal screening, travel rule between VASPs, and chain analytics weighted toward BTC.

P2P stablecoin transfers between self-custodied wallets fall through basically all of it.

I've got an exam in Q2. "we screen known bad wallets" feels increasingly thin when the examiner has clearly read the same FATF report and knows where the volume actually is.

Regulators aren't going to wait for the tooling to catch up, they're going to ask what you're doing about the gap right now.

There isn't a clean answer yet but "we screen exchanges" isn't it anymore.