Bitrace Report Warns of $649B in Risky Stablecoin Flows Impacting Crypto Market
A new report from blockchain compliance firm Bitrace has raised alarms over $649 billion in stablecoin transactions routed through high-risk addresses in 2024. This amount accounts for over 5% of total stablecoin activity that year, reflecting a notable but concerning decrease from the previous year, yet still higher than levels observed in 2021 and 2022.
Dominance of USDT and Surge in USDC’s Illicit Use
The Bitrace findings highlight the role of Tether’s USDT and Circle’s USDC in risky transfers, especially across platforms built on Ethereum and Tron. Despite some regulatory progress, USDT on TRON remained a primary conduit for high-risk transactions, while Ethereum-based stablecoins saw an uptick in illicit activity.
A significant portion of the flagged transactions stemmed from the rapidly growing online gambling industry, which processed $217.8 billion in stablecoin inflows—a 17.5% rise from 2023. Additionally, fraud-related transactions surged to $52.5 billion, far exceeding the previous year’s total and dwarfing totals from prior years.
Meanwhile, money laundering activities reached $86.3 billion, a marked decline from the $118 billion seen in 2023, likely attributed to stricter regulatory oversight. The USDC stablecoin, despite being issued by a regulated U.S. company, saw its share in illicit flows more than double, from 5.22% in 2023 to 13.36% in 2024.
Industry Reactions and Regulatory Pressures
In response to these concerns, both Tether and Circle froze more than $1.3 billion in illicit stablecoins in 2024—twice the amount frozen in the previous three years combined. This move shows the growing commitment of major stablecoin issuers to counter misuse within their ecosystems.
As stablecoins continue to gain mainstream adoption, with Mastercard unveiling a new global stablecoin payment system, legislative efforts are also intensifying. The STABLE Act, recently passed through the U.S. House Financial Services Committee, proposes stricter regulations for stablecoin issuers, marking a step toward comprehensive oversight in the sector.
