The Rise of Crypto in Global Crime: Risks for Investors and Opportunities in Compliance Tech

The intersection of cryptocurrency and criminal activity has become a critical focal point for investors, regulators, and technologists alike. While blockchain's promise of decentralization and financial inclusion remains compelling, its misuse for illicit purposes poses significant risks-and, paradoxically, opens doors for innovation in compliance technology. This analysis examines the evolving landscape of crypto crime, evaluates its implications for investors, and highlights the burgeoning opportunities in regulatory technology (RegTech) solutions designed to mitigate these threats.

Assessing the Risks: Crypto Crime in 2025

According to Chainalysis, the percentage of cryptocurrency transactions linked to criminal activities declined to 0.14% of total on-chain volume in 2024, down from 0.61% in 2023. However, this figure masks a troubling trend: the absolute value of illicit transfers has remained substantial, with $2.17 billion stolen in 2025 alone according to DeepStrike. Stablecoins, in particular, have emerged as the preferred vehicle for criminal activity, accounting for 63% of illicit crypto transfers by 2024 as Chainalysis reports. This shift underscores the growing sophistication of bad actors, who exploit stablecoins' perceived anonymity and pegging to fiat currencies to launder funds or finance illicit operations.

For investors, these dynamics introduce dual risks. First, regulatory scrutiny is intensifying. Governments and financial authorities are increasingly prioritizing anti-money laundering (AML) enforcement in crypto markets, which could lead to stricter compliance burdens and reduced liquidity for unregulated platforms. Second, the reputational damage associated with crypto crime could deter institutional adoption, slowing the broader integration of blockchain into mainstream finance. As stated by the 2025 Crypto Crime Report, "even a small fraction of illicit activity can erode trust in digital assets, particularly as stablecoins gain traction in global commerce" according to DeepStrike.

Opportunities in RegTech: A New Frontier for Compliance

Amid these risks, the RegTech sector is experiencing explosive growth, driven by the need to address crypto-related crime through technological innovation. The global RegTech market, valued at $14.69 billion in 2025, is projected to surge to $115.5 billion by 2035, expanding at a compound annual growth rate (CAGR) of 20.62% as reported by Business Wire. This growth is fueled by advancements in artificial intelligence (AI), machine learning (ML), and blockchain-based solutions that automate compliance processes and enhance transparency.

One standout example is LexisNexis Risk Solutions, which has pioneered AI-driven tools like ThreatMetrix and IDVerse to combat financial crime according to Business Wire. ThreatMetrix employs behavioral biometrics and device intelligence to analyze billions of transactions in real time, identifying patterns indicative of fraud or synthetic identity attacks. Similarly, IDVerse leverages AI to authenticate identity documents and detect deepfake threats, a critical capability as criminals increasingly exploit digital impersonation. These solutions are particularly relevant in crypto crime prevention, where rapid transaction speeds and cross-border complexity demand real-time monitoring as Business Wire reports.

The rise of cloud-based RegTech platforms further amplifies their appeal. By offering scalable, flexible infrastructure, these tools enable financial institutions to adapt to evolving regulatory requirements without significant capital expenditure. As noted in a 2025 industry analysis, "cloud-native solutions are becoming indispensable for firms seeking to balance compliance with operational efficiency in the decentralized finance (DeFi) era" according to Chainalysis.

Strategic Implications for Investors

For investors, the crypto crime landscape presents a paradox: while the risks of regulatory backlash and reputational harm are real, the surge in RegTech adoption offers a clear avenue for value creation. Startups and established firms specializing in AI-driven compliance, blockchain analytics, and identity verification are well-positioned to capitalize on this demand. Conversely, investments in crypto platforms lacking robust AML frameworks may face heightened volatility as regulators crack down.

Moreover, the integration of RegTech into traditional financial institutions and fintechs suggests a long-term structural shift. As global regulations tighten-such as the European Union's Markets in Crypto-Assets (MiCA) framework-demand for compliance solutions will only grow. Investors who align with this trajectory stand to benefit from both defensive growth (via reduced fraud exposure) and offensive innovation (via market leadership in compliance tech).

Conclusion

The rise of crypto in global crime is neither a passing concern nor an insurmountable obstacle. For investors, the key lies in balancing caution with opportunity: mitigating risks through diversified exposure to regulated assets while allocating capital to RegTech innovators reshaping the compliance landscape. As the market evolves, those who prioritize technological resilience and regulatory foresight will be best positioned to navigate the complexities of the digital finance era.