Once celebrated as the most transparent and traceable digital currency, Bitcoin is losing its dominance in the darker corners of the crypto economy. According to recent reports, stablecoins have now become the primary vehicle for illicit financial activity, marking a major shift in how criminals move money across borders.
Stablecoins, cryptocurrencies pegged to traditional assets like the U.S. dollar, were designed to bring stability to volatile crypto markets. They underpin much of today’s decentralized finance (DeFi) ecosystem, enable instant cross-border payments, and provide liquidity to traders worldwide. Yet those same advantages (speed, accessibility, and price consistency) have made them increasingly attractive to bad actors seeking to evade detection.
Stablecoins Dominate Illicit Crypto Activity
Blockchain analytics firm Chainalysis revealed that in 2024, stablecoins accounted for roughly 63% of all illegal crypto transactions, overtaking Bitcoin for the first time. The data highlights a trend in which criminal networks are using stablecoins for laundering funds, executing scams, and bypassing banking controls.
Because stablecoin transfers settle within minutes and can move quietly through unregulated exchanges and private over-the-counter (OTC) markets, they have become a preferred option for transferring large sums across borders.
In some regions, the misuse is becoming localized. South Korean authorities, for example, have uncovered scams involving fake online listings, known as Oda Jangjip, that rely on stablecoin payments to defraud unsuspecting buyers.
Global Watchdogs Sound the Alarm
International regulators are now paying closer attention. In a June 2025 report, the Financial Action Task Force (FATF) warned that the use of stablecoins by money launderers, terrorist financiers, and sanctioned entities continues to rise. It also highlighted the growing involvement of state-sponsored actors, including networks linked to North Korea.
The United Nations Office on Drugs and Crime (UNODC) echoed similar concerns in its 2024 findings, noting that Tether (USDT) on the TRON blockchain has become a common tool for Southeast Asian criminal syndicates engaged in online fraud and large-scale laundering operations.
Although transactions are recorded on public ledgers, the pseudonymous nature of blockchain addresses and the use of mixers (tools that blend multiple transfers to obscure their origins) make tracing the flow of funds increasingly difficult.
Mitigation Efforts and Security Recommendations
To counter these risks, Chainalysis recommends tighter oversight from both institutions and individual users. The firm advises investors to:
- Verify token contracts through official sources before making transfers.
- Use hardware wallets and enable multi-factor authentication for enhanced security.
- Stay alert to phishing scams and malicious smart contracts that attempt to drain wallets.
For companies handling stablecoins, Chainalysis recommends continuous transaction monitoring, smart contract audits, and adherence to anti–money-laundering (AML) and know-your-customer (KYC) protocols to detect suspicious activity in real time.
Market Outlook: Rapid Growth Amid Heightened Scrutiny
Despite rising regulatory pressure, the stablecoin market continues to expand at a remarkable pace. Its total capitalization recently surpassed $313 billion, underscoring its growing role in both legitimate and illicit finance.
U.S. Treasury Secretary Scott Bessent recently projected that stablecoins could reach a $2 trillion market value within three years, as adoption widens across retail payments, DeFi applications, and institutional use cases.
As regulators tighten oversight and blockchain analytics improve, the balance between innovation and control will determine whether stablecoins remain a trusted instrument of digital finance or continue to power the internet’s underground economy.
