Report finds Australian illicit crypto under 1%

TLDR

A new blockchain analytics report finds that under 1% of Australian crypto activity involves illicit counterparties, suggesting most local usage is legitimate.

1. TRM Labs data shows less than 1% of roughly $50 billion in Australian on-chain crypto flows from March 2025 to February 2026 was tied to illicit activity.
2. Most flagged volume relates to sanctions exposure, with smaller shares from darknet markets, fraud and other crimes, and Australia has ramped up AML obligations on exchanges.
3. For crypto users, this supports the view that crime is a small slice of activity, but regulators will likely push even harder on compliance and analytics-driven oversight.

Deep Dive

1. What The Report Shows

According to a recent TRM Labs analysis of Australian crypto flows, less than 1% of the countrys total on-chain crypto activity between March 2025 and February 2026 was linked to illicit counterparties, out of roughly $50 billion in volume and about $15 billion in incoming value to exchanges and DeFi platforms.

The report also notes that Australia ranks around 20th globally for total crypto value received among 95 countries, placing it in the top quartile by scale while still showing a very low illicit share.

Sanctions-related activity represents about 70% of the illicit portion, with the rest spread across darknet markets, investment fraud, illicit goods and services, and smaller categories like ransomware and terrorist financing, according to this summary of the TRM findings.

2. Why The Illicit Share Is Low

Australia has required digital currency exchanges to register with AUSTRAC and meet anti money laundering and counter terrorism financing rules since 2018, including KYC, transaction monitoring and suspicious matter reporting, which likely pushes some abuse away from regulated venues.

The TRM report also suggests that while criminals do use crypto, illicit usage has become just one layer within broader crime typologies, rather than dominating the ecosystem, as early drug market cases once did.

It is important to remember that these figures cover on-chain flows that TRMs analytics can label; off-chain fraud, social engineering and mislabelled transactions may not be fully captured, so the true picture is low share, but not zero risk.

3. Implications And What To Watch

For policymakers, a sub 1% illicit share strengthens arguments for technology neutral regulation that focuses on functions and intermediaries rather than treating all crypto as inherently criminal.

For exchanges and service providers, it reinforces that strong AML controls and cooperation with law enforcement can materially limit illicit penetration, but sanctions exposure and cross border flows will remain high priority risk areas.

For everyday users, this reduces the stigma that crypto equals crime, but it also means more analytics, monitoring and possibly stricter onboarding, as regulators lean on data like this to justify tighter oversight.

Conclusion

Australias experience shows that a growing, sizable crypto market can coexist with a relatively small proportion of illicit on-chain activity when strong compliance, registration and analytics are in place. The key tension ahead is balancing that evidence of predominantly legitimate use with continued pressure to police sanctions, fraud and cross border crime without stifling normal users and builders.