Stablecoins, sanctions and surveillance: Why 2025 reshaped crypto's regulatory reality

Source: CryptoNewsNet Original Title: Stablecoins, sanctions and surveillance: Why 2025 reshaped crypto’s regulatory reality Original Link: As crypto markets entered 2026, one theme became increasingly clear: Last year was less about speculation and more about infrastructure, regulation, and real-world use. Across jurisdictions, regulators and institutions moved from theory to implementation, reshaping how digital assets are supervised and used.

A defining feature of this shift was the rise of stablecoins. While Bitcoin (BTC) continues to dominate crypto market capitalization, stablecoins now account for more than half of all onchain transaction volumes globally. Their increasing role in payments, remittances, and trading has placed them firmly in the center of regulatory attention, particularly as governments grapple with financial stability and compliance risks.

Stablecoins aren’t on the sidelines

According to recent insights, 2025 has been a year of stablecoins. This dominance has been building for years, with stablecoins now “clearly dominating the crypto assets landscape with more than 50% of transactional volumes,” even as Bitcoin retains roughly half of total market capitalization.

That growth has made stablecoins attractive for legitimate use cases and for illicit ones. Stablecoins have been dominating the crypto assets transactional volumes already for quite a while now, both in illicit usage and also in legitimate usage.

Criminals favor stablecoins because they are liquid, globally accessible, and avoid volatility. Still, that same structure creates enforcement leverage. Centralized stablecoin issuers typically have the ability to freeze or even burn stablecoins, calling it “an extremely powerful tool to combat financial crime.”

Crypto crime turns geopolitical

Beyond individual scams and hacks, 2025 also marked a shift toward state-linked crypto activity.

2025 has really been, in many instances, a record year for crypto crime. Chainalysis recorded $154 billion in illicit crypto flows, a 162% increase year-over-year. Much of that growth was driven by nation-state actors.

Nation-state actors are facilitating crypto usage for illicit activity on a really professional level. Specific sanctioned stablecoins and state-backed networks are being used for sanctions evasion.

Despite the surge, illicit activity still represents a small share of overall usage. Even with the increase observed, it’s still under 1% of overall activity, underscoring the challenge regulators face as adoption accelerates.

Europe’s ongoing implementation of the Markets in Crypto-Assets Regulation and other global frameworks are taking shape and creating a more structured industry.