November 19, 2025
By Anjali Kochhar
A new report reveals that Chinese money laundering networks are increasingly relying on cryptocurrencies such as Bitcoin and stablecoins like USDT to move and disguise illicit wealth, even with China’s strict capital controls in place.
The study, authored by Kathryn Westmore, a senior research fellow at the Royal United Services Institute’s Centre for Finance and Security, explains that virtual assets have become an essential part of the laundering infrastructure used by organized crime groups in China. According to the report, criminals accept dirty cash from individuals and provide them with crypto tokens in return. This process converts physical cash into digital value that can be shifted across borders with very little friction.
These operations serve two purposes. They help wealthy Chinese citizens transfer money abroad while bypassing national restrictions on capital movement. They also give criminal networks a cleaner and more flexible method for processing money earned from illegal activities.
The report highlights a growing link between these laundering operations and global drug trafficking, especially in the trade of synthetic opioids. Many sellers of fentanyl precursor chemicals in China are now taking payment in Bitcoin or USDT. These digital currencies have become a preferred payment system for the illegal drug economy and allow fast and somewhat anonymous transactions between intermediaries.
Blockchain data backs these findings. The report refers to on-chain analysis from Elliptic, a blockchain security firm, which discovered crypto transactions connected to Chinese entities involved in the fentanyl supply chain. The data points to a complex and international network that converts illicit cash into crypto inside China and then moves the funds offshore or into other criminal markets.
Westmore notes that this kind of global activity cannot be effectively countered by one country acting alone. Since crypto assets can easily cross borders, coordinated international regulation and enforcement will be necessary to address the threat.
The report also raises concerns about whether current law enforcement strategies are sufficient. Europol officials recently stated that criminal use of crypto has become far more advanced, making traditional investigative methods less effective.
Crypto-related crime continues to rise. Investors reportedly lost more than $2.3 billion in 2025, and pig butchering scams cost victims an estimated $4 billion in 2024. For regulators and governments worldwide, the challenge is increasing. Virtual assets are no longer a niche tool for criminals. They have become central to many large-scale money laundering operations.
About the author
Anjali Kochhar covers cryptocurrency and blockchain stories in India as well as globally. Having been in the field of media and journalism for over four years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
