Top Highlights
- Illicit crypto flows surged 162% in 2025 to $154 billion, with sanctioned entities receiving a 694% jump in value.
- Stablecoins, especially Tether, now dominate 84% of illicit transactions, surpassing Bitcoin as the preferred criminal payment method.
- The debate around crypto regulation intensifies as the Senate advances the CLARITY Act, amid strong lobbying from banks and crypto advocates.
- Critics argue that increased AML efforts have reduced successful money laundering, with data showing fewer illicit funds being laundered today.
CLARITY Act Clears Committee, But Money Laundering Question Hovers Over Crypto
Legislative Progress and Concerns
Last Thursday, the Senate Banking Committee voted 15-9 to advance the CLARITY Act, a proposal to regulate the crypto market. This move is seen as a significant step toward clearer rules for digital assets. However, the debate is far from over. As lawmakers discuss the bill, concerns about money laundering in crypto circles remain strong. Just before the vote, the Bank Policy Institute (BPI) highlighted alarming data on illicit crypto activity. The group tweeted that in 2025, illegal crypto flows reached $154 billion. This figure is a 162% increase from last year. Most troubling is the fact that sanctioned entities received a 694% bigger share of these funds. Moreover, the amount of money laundered through on-chain transactions grew from $10 billion in 2020 to over $82 billion in 2025. Stablecoins, especially Tether, now make up 84% of illicit crypto transactions, surpassing Bitcoin. That shift shows how criminals are increasingly using stablecoins for illegal activity. The BPI argues that banks have spent decades building anti-money laundering (AML) measures, while crypto firms have been mostly excluded. They also point out that some US stablecoin issuers, like Tether, are outside U.S. regulation. For instance, Tether is based in El Salvador. Such gaps raise questions about how well current rules can combat crypto-based crime.
Balancing Regulation and Reality
While the BPI pushes for tighter AML rules, other data from Binance Research gives a different picture. According to Binance, fewer illegal funds are successfully laundered each year. They say that as more exchanges implement Know Your Customer (KYC) checks, fewer illicit funds can escape. Binance reports that even the largest mixers, used to obfuscate transactions, process no more than $10 million daily. This suggests that efforts to block illegal crypto flows are working. Meanwhile, the debate over stablecoins remains heated. Banking groups want stricter rules to limit stablecoin yields, fearing they could be used for illegal purposes. In response, support from crypto advocates has been strong, with millions of contacts urging lawmakers to protect digital assets. Despite opposition and many proposed amendments, the legislation moved forward with some bipartisan backing. Still, questions about the effectiveness of regulation and technology to stop money laundering stay at the forefront of discussion.
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