For years, Bitcoin was the bogeyman of financial regulators and cable news chyrons alike. The digital currency of drug dealers, ransomware gangs, and money launderers, or so the story went. Turns out, criminals have moved on to something more practical: stablecoins.
River, a Bitcoin-focused financial services firm, highlighted this shift on May 31, pointing to data from multiple Chainalysis Crypto Crime Reports spanning 2024 through 2026. The takeaway is straightforward. Stablecoins now account for over 63% of all illicit crypto transaction volume, decisively overtaking Bitcoin as the preferred tool for bad actors.
Why criminals switched, and why it makes sense
If you’re running a cross-border payment operation, laundering money, or facilitating scams at scale, the last thing you want is your working capital swinging 10% in a weekend. Stablecoins, pegged to fiat currencies like the US dollar, eliminate that problem entirely.
This trend didn’t appear overnight. The pivot toward stablecoins in criminal finance started around 2022, and it has only accelerated since. Online scams in particular have shifted heavily toward USDT, Tether’s flagship stablecoin, which dominates stablecoin market share and therefore dominates illicit stablecoin usage.
Illicit stablecoin transaction volume reached approximately $25 billion in a single year, according to TRM Labs data. That figure sits within a broader context: overall illicit crypto activity hit a record $158 billion in 2025, per TRM Labs.
Bitcoin hasn’t disappeared from the criminal toolkit. It remains the preferred medium for ransomware payments and darknet market transactions, two categories where pseudonymity and established infrastructure still matter more than price stability. Ransomware operators demanding payment typically want Bitcoin because victims can acquire it relatively easily, and darknet marketplaces have been built around Bitcoin rails for over a decade.
The regulatory pressure building on stablecoin issuers
This data creates an uncomfortable spotlight for stablecoin issuers, particularly Tether. The company has responded by cooperating with law enforcement, freezing $344 million in USDT linked to illicit activity. That’s a meaningful number, but it’s also a fraction of the $25 billion in illicit volume flowing through stablecoins annually.
Tether’s willingness to freeze wallets highlights a feature that decentralization advocates have long warned about: centralized stablecoin issuers can freeze your funds with the flip of a switch. For criminals, that’s an emerging risk. For regulators, it’s a lever they’re increasingly willing to pull.
Circle, the issuer behind USDC, faces similar scrutiny. As blockchain analytics firms like Chainalysis and TRM Labs continue documenting these patterns, regulators worldwide are building the evidentiary basis for stricter stablecoin oversight.
What this means for investors
For Bitcoin holders, this data is paradoxically positive. The “Bitcoin is for criminals” narrative has been one of the most persistent headwinds for institutional adoption. If the data clearly shows that criminals have migrated to stablecoins, that removes one of the easiest rhetorical attacks against Bitcoin as an asset class.
For stablecoin users and DeFi participants, the implications are more complicated. Increased regulatory scrutiny on issuers could introduce new compliance requirements that ripple through the entire ecosystem. Think mandatory KYC for on-chain transfers above certain thresholds, expanded blacklisting of wallets, or stricter redemption processes.
The competitive landscape among stablecoin issuers could also shift. If Tether faces disproportionate regulatory pressure due to USDT’s outsized role in illicit transactions, competitors with cleaner compliance histories could gain market share.