In 2025, the total transaction volume of global crypto payment tools linked to fiat currencies was approximately $33 trillion, marking an increase of about 72% compared to the previous year. As the new year began in the UTC+8 time zone, this data quickly became the focus of the industry. While driving the overall expansion of the crypto market, on-chain monitoring institutions also revealed that the funds flowing into marked illegal crypto addresses in 2025 amounted to approximately $154 billion, a staggering increase of about 162% year-on-year, far exceeding the overall market growth. More strikingly, in these illegal-related crypto transactions, the volume of trades involving fiat-linked assets accounted for about 84%, playing a dual role as a core liquidity infrastructure for the market while being deeply involved in the flow of gray funds. This set of data clarifies the main theme for 2025: under the rapid expansion of transaction scale and usage scenarios, compliance risks and regulatory pressures are increasing daily, and the game of redefining the line between efficiency and risk control has begun to accelerate.
Drivers of the $33 Trillion Transaction Surge
● Scale and Growth Rate: In 2025, the total transaction volume of such linked assets globally was approximately $33 trillion, an increase of about 72% from the previous year. This growth in both absolute scale and rate far exceeds that of most traditional asset classes in payment and settlement, indicating that they have transformed from "auxiliary tools" to "main channels" across multiple funding paths such as on-chain settlement, over-the-counter hedging, and crypto asset allocation.
● Market Landscape: Within the overall transaction volume of about $33 trillion, the volume related to USDC was approximately $18.3 trillion, holding an absolute leading position. This proportion demonstrates the dominance of a single category in the global crypto payment and clearing network and reflects the concentration of institutional and compliance-oriented funds in its usage preference.
● Historical Evolution: Over the past few years, the annual transaction volume of these assets has expanded from the initial level of several hundred billion dollars to the current level of hundreds of trillions of dollars. Their use has long exceeded single trading pairs or arbitrage scenarios, becoming a "central layer" that links on-chain and off-chain capital flows tied to traditional currencies. The price discovery, leverage expansion, and cross-platform settlement in the crypto market heavily rely on the instant liquidity they provide.
● Scenario Overlap: The driving force behind the $33 trillion scale is not a single scenario's explosion but rather the amplification of multiple demands. In the spot market, the entry and exit between fiat and crypto assets are often facilitated through these linked assets; in derivatives trading, margin and settlement heavily utilize such assets to reduce the impact of volatility on position management; in decentralized finance protocols, they are widely used as benchmark assets for collateral, lending, liquidity provision, and yield strategies. It is the intertwining of spot, derivatives, and on-chain finance that forms the demand base behind the $33 trillion.
Warning Signs of the $154 Billion Surge in Illegal Funds
Another set of data for 2025 reveals the shadow side of this infrastructure. According to statistics from on-chain analysis institutions, the funds flowing into crypto addresses marked as illegal or high-risk that year amounted to approximately $154 billion, with an increase of about 162% compared to the previous year, significantly outpacing the overall transaction volume growth of about 72%. In other words, while the total volume expands, the growth rate of problematic funds is eroding the credibility of this channel even faster. More concerning is that among the crypto transaction volume related to illegal activities, the volume of fiat-linked assets accounts for about 84%, indicating their dominant role as a key medium in the flow of gray funds. On one hand, the public transparency and traceability of on-chain transactions provide a technical basis for regulators and compliance service providers to identify abnormal fund flows; on the other hand, their convenience, speed, and global reach significantly lower the barriers for funds to flow across platforms, chains, and even borders, objectively amplifying the contradiction between data transparency and compliance pressure. This tension of "the more transparent, the more intense the monitoring needed" is driving the continued upgrade of regulatory frameworks and industry self-regulatory rules.
Role Fragmentation from Market Leaders to Compliance Suspects
The same batch of data presents starkly different interpretative paths under different narratives. From the perspective of market efficiency, the annual transaction volume of $33 trillion and the $18.3 trillion volume of USDC mean that funds can flow between exchanges, wallets, and on-chain protocols with lower friction costs and higher speeds, greatly enhancing the price discovery efficiency of crypto assets and the accessibility for global investors. Conversely, when $154 billion of funds flow into illegal addresses and about 84% of related transactions point to fiat-linked assets, these advantages are viewed as "accelerators" for the rapid transfer and concealed movement of problematic funds, thus becoming the focus of regulatory and public scrutiny.
The reason why these linked tools are more easily used for fund transfers compared to assets like Bitcoin, which experience severe price volatility, lies mainly in their anchoring to fiat currencies and relatively stable prices, significantly reducing the risks of exchange rate and market value fluctuations during transfers. Additionally, their high liquidity across multiple platforms and chains allows funds to quickly switch between centralized and decentralized scenarios, forming continuous transfer paths. In typical scenarios where large cross-border fund transfers, over-the-counter settlement arrangements, and on-chain arbitrage blur the lines of compliance and risk, these assets often play a bridging role, serving both legitimate liquidity and risk management needs while also being easily caught up in the intertwining flows of compliant and illegal activities. For regulators and industry participants, the core challenge lies in how to effectively compress the high proportion of illegal usage space without stifling liquidity innovation and efficiency dividends, which requires finding a new balance between product design, transaction monitoring, and access thresholds.
Boundaries and Limitations of Data Perspectives
The key data mentioned above primarily comes from annual reports by on-chain analysis institutions, including teams like Chainalysis that have long tracked the flow of crypto funds. These institutions typically estimate the scale and structure of funds flowing into related addresses by aggregating and analyzing marked illegal or high-risk addresses. This method relies on publicly available on-chain data and labeling systems but inherently has limitations in coverage. The statistics on illegal funds only include addresses that have been identified and labeled; addresses and activities that have not yet been exposed or accurately classified may not be fully included in the data sample, leading to a potential underestimation of the actual scale. However, in the absence of more complete evidence, it is also inappropriate to exaggerate or extrapolate more extreme figures from this.
When interpreting this set of data, it is also necessary to distinguish between "total transaction volume" and "illegal inflow" as two different metrics. The former refers to the total of all on-chain or on-chain visible transactions generated by fiat-linked assets across various scenarios throughout the year, covering a large number of compliant and neutral activities such as trading, clearing, payment, and lending; the latter only refers to the new funds flowing into marked illegal or high-risk addresses. If these two are conflated without distinction, it is easy to simplistically equate all activities of linked assets with risky funds, leading to cognitive amplification and misinterpretation. More importantly, under the current data conditions, it is neither possible nor appropriate to directly attribute responsibility to a specific currency, region, or institution. The data can present macro structures and trends, but not precise legal-level accusations, which is a boundary that must be adhered to when interpreting related reports.
Regulatory Race and Restructuring of Responsibility Landscape
In the face of the reality that the growth rate of illegal funds is significantly outpacing the overall market, countries are generally strengthening constraints and monitoring of on-chain activities along several macro paths. First, they require crypto service providers integrated into the traditional financial system to enhance KYC/AML standards, reducing direct access for high-risk entities to legitimate financial channels through more detailed identity verification, source of funds checks, and transaction behavior profiling; second, they promote continuous monitoring and updating of on-chain addresses, in conjunction with address blacklists, transaction filtering, and risk warning mechanisms, attempting to identify and block suspicious funds early in the on-chain flow; third, they enhance overall visibility of cross-border fund chains through inter-agency and cross-jurisdictional information sharing to reduce the space for arbitrage in "weak links" within a single market.
As the compliance framework continues to tighten, issuers of fiat-linked assets may face more frequent reserve audit requirements to enhance the transparency and credibility of their asset backing. They may also be required to cooperate with more detailed transaction tracking and reporting obligations, including proactive disclosure of large or unusual flows. Exchanges and other trading platforms will need to technically integrate more on-chain analysis tools and risk control services to achieve a new balance between user experience and risk interception. As about 84% of the relevant funds in illegal transactions point to such assets, the landscape of responsibility among issuers, trading platforms, and compliance service providers is quietly being restructured, with less space for any single link to attempt to "go it alone." In this process, regional regulatory rules represented by MiCA provide a reference for the industry towards compliance, symbolizing the release of signals that "can be incorporated into existing financial regulatory frameworks," but the applicability and enforcement of specific terms still need to be continuously tested in practice.
Turning Point of Growth Dividends and Compliance Challenges
Looking back at the entire year of 2025, the total annual transaction volume of approximately $33 trillion and the inflow of funds into illegal addresses of about $154 billion together outline the light and shadow of fiat-linked assets. On one hand, they continue to provide deep liquidity and an efficient settlement network for the crypto market with a year-on-year growth rate of 72%, becoming a key infrastructure connecting traditional finance and the on-chain world; on the other hand, the approximately 162% growth rate of illegal funds and their approximately 84% share in related transactions have pushed this infrastructure to the forefront of compliance and public scrutiny. If the growth rate of illegal funds continues to exceed the overall transaction scale in the coming years, this category will inevitably face stronger expectations of regulatory tightening and more stringent reputational scrutiny, potentially forcing structural adjustments in its business model and technological framework.
Looking ahead to the next phase, a clear and actionable compliance path will determine which issuers and platforms can navigate the regulatory cycle; more mature on-chain transparency tools and data analysis capabilities will seek new boundaries between identifying abnormal behaviors and protecting normal transactions; and more refined risk control standards will gradually permeate every aspect of product design, user access, and institutional collaboration. For investors and institutions, when using and positioning such assets, it is no longer sufficient to only calculate liquidity dividends and interest income; they also need to explicitly incorporate policy and compliance risks into pricing models, including differences in regulatory attitudes across jurisdictions, potential constraints on business models, and impacts on the long-term availability of assets. In the intertwined landscape of growth dividends and compliance challenges in 2025, the true winners are likely not the fastest runners, but those who complete compliance and risk repricing the earliest.
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