A recent New York Times report stirred controversy by labeling stablecoins as the preferred tool for money launderers and those evading sanctions, sparking a strong rebuttal from the crypto industry. The report claimed stablecoins threaten vital U.S. foreign policy capabilities, painting a stark picture of their illicit use.
Stablecoins and Illicit Finance: A Contentious Debate
The New York Times article highlighted stablecoins as the primary conduit for illicit financial activities, with an estimated $25 billion moved in 2024 alone, potentially undermining America's ability to sanction adversaries. This led to immediate criticism from figures within the crypto space, who viewed the report as an unfair attack on a technology improving finance. While Chainalysis data confirms a significant shift, showing stablecoins now account for 63% of illicit on-chain volumes—surpassing Bitcoin's previous dominance—the industry contends that the report exaggerates the broader impact.
Putting Illicit Activity in Perspective
Despite the increased use of stablecoins by criminals, the NYT report has been criticized for overstating the overall proportion of illicit activity within the crypto ecosystem compared to traditional finance. Chainalysis data reveals that total crypto illicit flows constitute a mere 0.14% of global illicit activity and have remained below 1% for the past five years. Moreover, key industry players, particularly stablecoin issuer Tether, are actively engaged in combating financial crime. Tether's T3 Financial Crime Unit has frozen hundreds of millions in crime-related funds and collaborated with global authorities, demonstrating that on-chain sanctions are indeed achievable, though the rapid nature of cryptocurrency transactions demands swift detection and intervention.
