https://www.crowdfundinsider.com/2026/01/257043-bitpanda-examines-facts-around-illicit-crypto-use-challenges-narratives-about-virtual-currencys-role-in-money-laundering/
European digital assets platform Bitpanda has released an update that examines the facts around “illicit crypto use” while also challenging prevailing narratives about cryptocurrency’s role in money laundering, terrorist financing, and sanctions evasion. As authorities like the European Anti-Money Laundering Authority (AMLA) and the Financial Action Task Force (FATF) label the crypto sector as high-risk, Bitpanda says that it offers a balanced counterpoint, emphasizing blockchain‘s transparency over its perceived vulnerabilities.
The update from Bitpanda directly addresses claims from AMLA’s 2025 Work Program, which highlights crypto’s “technological features, cross-border operations, and anonymity-enhancing capabilities” as significant risks for financial crimes.
Similarly, FATF’s June 2025 report warns of stablecoins‘ increasing use by illicit actors, noting that most on-chain activity now involves them, potentially heightening crime risks with mass adoption.
Bitpanda argues these views overlook crypto’s inherent strengths.
Unlike traditional finance (TradFi), where cash and bank transfers enable opacity, blockchain provides immutable records, traceability, and public accessibility.
The Bank for International Settlements (BIS) Bulletin No. 111 from August 2025 supports this, suggesting blockchain could enable an “AML compliance score” for assets, aiding authorities at fiat off-ramps.
A key myth debunked is the infallibility of obfuscation methods like mixers, bridges, and privacy coins.
While these complicate detection, they leave traceable trails through techniques such as address clustering, graph analysis, and machine learning.
Even privacy-focused coins like Monero are vulnerable to flaws in decoy selection, timing analysis, and off-chain data like IP correlation.
Exchanges can block or quarantine such features, further limiting anonymity.
Bitpanda cites real-world successes in asset tracing to illustrate this.
In the 2021 Colonial Pipeline ransomware case, the FBI seized about 63.7 BTC by following the public blockchain trail.
The 2022 Bitfinex hack recovery involved IRS and FBI agents navigating layers of obfuscation, using KYC data and seized private keys to recover funds.
Similarly, Silk Road seizures in 2020–2021 demonstrated blockchain’s longevity in preserving evidence, despite mixing services.
More recently, in March 2025, US authorities disrupted the Russian exchange Garantex, freezing $26 million linked to illicit activities via blockchain analytics.
On stablecoins, the post counters fears by noting their centralized nature—issuers like those behind USDC and USDT can freeze reserves, even post-mixing.
Decentralized options like DAI face liquidity constraints for large-scale crime. BIS reinforces that stablecoin wallets trace back to minting origins, enabling oversight.
Statistics paint a clearer picture: Illicit crypto activity comprises just 1–2% of the ecosystem, per FATF‘s 2025 updates, while traditional methods like cash and hawala dominate ML/TF.
The European Banking Authority‘s 2025 report shows crypto’s AML/CFT breaches decreasing from 2022–2024, aligning with TradFi levels by 2024, suggesting human error, not tech, drives risks.
In conclusion, Bitpanda addresses the high-risk label, arguing crypto’s design enhances monitoring and deters crime more than it enables it. By leveraging blockchain’s auditability, regulators can address abuses effectively, rather than overgeneralizing.
This update urges a more nuanced approach, recognizing crypto‘s potential to improve financial integrity over TradFi’s opacity.
