The 2026 Crypto Crime Report from TRM Labs paints a stark picture of the growing role digital assets play in global illicit finance. According to the report, illicit crypto flows surged to an estimated $150 billion last year, a sharp increase that reflects how state and state-aligned actors are increasingly embedding cryptocurrency into their financial operations. The findings highlight the continued dominance of Russian-linked networks in sanctions evasion, rising institutional crypto adoption in economies such as Venezuela, and China’s emergence as a major hub for illicit crypto services. Much of that activity is tied to Chinese-language escrow platforms and underground banking networks, which have expanded significantly over the past five years.
Offering insight into the report’s findings is Ari Redbord, global head of policy at TRM Labs. Redbord points to a 140% increase in illicit cryptocurrency activity as one of the report’s most striking conclusions. His analysis sheds light on how these trends are reshaping global finance, the difficult balance facing countries like Venezuela, and what lies ahead for crypto regulation and infrastructure.
Redbord explained that illicit crypto activity spans a wide range of offenses, including money laundering, fraud, and transactions involving sanctioned entities. While illicit transactions still account for a relatively small share of total crypto activity, roughly 1.2% to 1.4%, the dollar volume continues to rise alongside broader crypto adoption. That growth, he said, reflects the expansion of both criminal networks and legitimate crypto markets operating in parallel.
Geopolitical pressures have further accelerated the use of crypto infrastructure by nation-states, Redbord noted. In some cases, governments and affiliated groups are turning to digital assets to move funds when traditional financial channels are restricted. He cited reports that the Iranian Revolutionary Guard Corps has used crypto to raise and transfer funds, underscoring the increasingly complex intersection of state finance and blockchain technology.
Venezuela stands out as one of the most revealing examples in the report. Years of hyperinflation have pushed citizens toward stablecoins and peer-to-peer markets as alternative financial systems. Despite its relatively small economy, Venezuela ranked 11th in TRM Labs’ global crypto adoption index. For many residents, stablecoins have become a critical financial lifeline amid economic instability. At the same time, the Maduro regime has also turned to cryptocurrency as a means of bypassing U.S. sanctions.
That dual use highlights a growing challenge, Redbord said. While everyday users rely on crypto for basic financial stability, the same tools can be exploited by governments and sanctioned actors for illicit purposes. As the crypto ecosystem continues to expand, Redbord expects both lawful and unlawful activity to grow in tandem, driven by citizen demand for stability and state efforts to evade financial restrictions.
On the regulatory front, Redbord expressed cautious optimism. He pointed to ongoing discussions around a market structure bill aimed at curbing illicit finance while preserving space for blockchain innovation. Despite political friction in Washington, he believes dialogue among lawmakers, regulators, law enforcement, and the crypto industry is moving toward a more balanced framework that supports growth without undermining oversight.
One area drawing particular attention is the treatment of stablecoin yields. Redbord noted that as traditional financial institutions deepen their involvement with digital assets, clarity around how stablecoins are regulated and used has become increasingly important. While negotiations remain contentious, he suggested momentum could shift toward more constructive policy outcomes in the near term.
Looking ahead through 2026, Redbord identified two key themes to watch. The first is the accelerating engagement of traditional financial institutions with crypto markets. Recent weeks have already shown meaningful steps toward integration rather than isolation. The second is the continued use of crypto infrastructure for a wide range of purposes, from legitimate financial access to sanctions evasion.
The contrasting use cases highlighted in countries like Venezuela and among sanctioned entities underscore the broader challenge facing policymakers. Cryptocurrency has emerged as both a legitimate financial tool and a vehicle for illicit activity. Managing that tension will require careful oversight that allows ethical use while limiting abuse.
Overall, the 2026 Crypto Crime Report underscores the dual nature of the crypto ecosystem. It highlights the technology’s potential to reshape global finance while exposing the risks that come with rapid adoption. As digital assets continue to mature, coordinated efforts across government, industry, and law enforcement will be critical to building regulatory frameworks that protect against misuse while supporting innovation and long-term financial growth.