In the battle against international money laundering, cryptocurrency remains the weakest link. Users can receive payments from unknown sources from around the world, which makes it hard for the network to keep out the proceeds of crime — ransom cyber attacks, drug trafficking, or worse. An extensive network of dealers also buy or sell crypto against cash.
Until now, it has been relatively difficult to transform illegally earned crypto into real economy spending power. Few merchants accept cryptocurrency, so those sitting on illicit gains must exchange crypto into conventional, or fiat, currencies. That involves taking foreign exchange risks and then transferring the fiat money through wallet and exchange services into the core banking system. The end point is a bank account, which is significantly harder to obtain than a crypto wallet.
As a result, criminally obtained cryptocurrency is still mostly contained in terms of real-world spending. Any big cash-out spree by the dark economy also bears the risk of crashing the entire crypto market, which puts many people off from taking money out.