Navigating the 1% Dilemma: Differentiating Between Criminals and Legitimate Users in the Crypto World
In South Africa, cryptocurrency often enters boardrooms cloaked in suspicion. The mere mention of bitcoin triggers associations with ransomware, sanctions evasion, or a briefcase of untraceable tokens. This reaction is understandable; the concerns are valid, as they reflect real and troubling scenarios. However, these narratives fail to represent the actual use of cryptocurrency, especially in the regions that are most significant for South Africa.
The most recent forensic data paints a stark picture. In 2025, it was reported that identified illicit addresses received at least $154 billion in cryptocurrency, a significant increase predominantly attributed to sanctioned entities and stablecoins (Chainalysis, 2026).
TRM Labs (2026) offers a similar estimate of $158 billion. In both cases, illicit activity constitutes less than 1% to 1.2% of the identified on-chain volume. This figure should be highlighted in any discussions about “crypto and crime.”
A proportion of around 1% does not denote a clean bill of health. Rather, it dismantles the assertion that digital assets are widely utilized for illicit finance.
Read: Fed proposes payment stablecoin issuer identification program
This myth persists because the transparent nature of public ledgers reveals the most notorious 1%, while comparable activities in cash, hawala, trade mis-invoicing, and correspondent banking remain shrouded in secrecy. In Southern Africa, that lack of transparency incurs a heavy cost, burdening working families monthly.
Focus on the corridor, not the courtroom
South Africa is no minor character in this discussion; it serves as a significant sending hub. In 2024, outbound remittances from South Africa to neighboring nations surpassed R19.4 billion, more than triple the amount in 2016 (Katende, 2026).
Millions of workers from Zimbabwe, Mozambique, Malawi, Lesotho, and eSwatini transfer value back home from Gauteng, the mines, and agricultural sectors.
Sub-Saharan Africa continues to be the priciest region globally to receive such funds. According to World Bank data, sending $200 to this region cost nearly 8% in 2025, almost three times higher than the UN Sustainable Development Goal target of 3%.
Some corridors from South Africa to Zimbabwe, Malawi, and Lesotho have been reported with costs even higher, approaching 15% (World Bank, 2025; South African Reserve Bank, 2025).
Read: Africa’s next payments leap: Stablecoins on every corner
SADC’s integration efforts have been inconsistent. Although there has been notable progress with shared settlements and the Transactions Cleared on an Immediate Basis scheme, average remittance costs within SADC still exceed the Sub-Saharan average on several indicators due to a lack of a unified payments market, as well as cash-out, compliance, and limited competition that contribute to high costs (FinMark Trust, 2024; Sarb, 2025).
This is the system against which cryptocurrency should be evaluated here: not as a Swiss mixer, but rather as a R2,000 transfer that arrives late and underfunded.
From July 2024 to June 2025, Sub-Saharan Africa saw over $205 billion in on-chain value, marking a 52% year-on-year increase, making it the third-fastest-growing crypto region globally (Chainalysis, 2025).
Transfers under $1,000 made up a larger share of regional volume compared to the global average. This trend indicates that the transactions are reflective of everyday expenditures, payroll, and family support, rather than the activities of oligarchs. This flow is now predominantly carried out through stablecoins.
Households did not embrace dollar-pegged tokens to fund illegal activities; they adopted them out of necessity due to the slow, costly, or inaccessible official channels.
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Read: Blockchain is quietly powering everyday life across Africa
This does not serve as an endorsement for unregulated capital flight. South Africa’s exchange control regulations remain in effect. Utilizing cryptocurrency to transfer value abroad without the necessary permissions is not a clever workaround; it constitutes a compliance breach, as highlighted by recent litigation from the Reserve Bank.
The more pragmatic approach is straightforward. License the on- and off-ramps, enforce the same customer due diligence expected of traditional money transmitters, and cease treating a more affordable option as a moral failing.
What the scandal file actually shows
The scandal file is not devoid of substance. In November 2024, Ukraine’s High Anti-Corruption Court sentenced MP Andriy Odarchenko to eight years for attempting to offer a bitcoin bribe, marking the country’s first recorded instance of a cryptocurrency inducement (High Anti-Corruption Court of Ukraine, 2024).
Alexander Vinnik, the operator behind the early exchange BTC-e, pleaded guilty in the United States in 2024 to a money-laundering conspiracy and was released in February 2025 as part of a prisoner swap (United States Department of Justice, 2024; 2025).
Garantex, a Moscow-related exchange long associated with ransomware funding, had its domains seized in March 2025 by the US Secret Service, in collaboration with Europol, Germany, and Finland. Within days, a successor brand, Grinex, began facilitating client liquidity alongside a rouble-pegged stablecoin (United States Department of Justice, 2025; TRM Labs, 2025).
Read: SA bitcoin ‘ponzi’ scheme out of regulator’s reach
Such incidents demonstrate capability, not prevalence. A crowbar might be used to open a safe, but that does not make every hardware store a criminal operation.
The same public blockchain that enables a corrupt official to transfer 0.39 bitcoin also allows investigators to trace the wallet, seize the coins, and secure a conviction. Sending a cash envelope from Johannesburg to Harare does not afford prosecutors that level of insight.
The earlier academic literature supports this observation. Foley, Karlsen, and Putnins (2019), in The Review of Financial Studies, estimated that during bitcoin’s early association with the dark web, around a quarter of its users and nearly half of its transaction volume were linked to illegal activities.
That paper is peer-reviewed and remains the most cited analytical assessment of early bitcoin-related crime, yet it also documented a decline in illegal usage as legitimate users entered the market. Applying a market structure from 2013-2017 to today’s landscape is how a valuable research paper morphs into a misleading tagline.
The comparison nobody wants
For more than ten years, the United Nations Office on Drugs and Crime has estimated global money laundering to account for approximately 2-5% of world GDP, amounting to hundreds of billions to several trillion dollars annually, with the vast majority still channeled through banks, cash, businesses, and trade (UNODC, 2011).
Ernst & Young (2025) approximates the broader shadow economy at around 12% of GDP across a large sample of countries. High-denomination bills, cash-centric industries, professional enablers, and offshore companies have moved significantly more stolen assets than any mixer.
The work done by Transparency International regarding Russian trades through the British Virgin Islands and Bermuda reinforces this argument without the need for blockchain.
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Russia’s score of 22 out of 100 on the 2025 Corruption Perceptions Index underscores a reality of governance, not a critique of bitcoin (Transparency International, 2025).
Two additional comparisons are noteworthy. First, detection capabilities. Analysts can track over 80% of identified illicit flows on a public ledger after the initial transaction (Binance Research, 2026).
By contrast, the UNODC has long estimated that only around 1% of laundered assets are confiscated in the traditional financial system. Second, the nature of the transactions. In 2025, 84% of illicit crypto volume was transacted in stablecoins, rather than through “anonymous bitcoin” (Chainalysis, 2026).
Criminals naturally gravitate towards liquidity and stability, just as they do with dollars, euros, and rand; the asset itself is not the motivation.
This is not a stance against regulation. The Financial Action Task Force’s Recommendation 15 already mandates virtual asset service providers to implement customer due diligence, adhere to the travel rule, and report suspicious activities (FATF, 2019; 2026).
As of March 2026, South Africa’s Financial Sector Conduct Authority had approved 310 licenses for crypto asset service providers out of 533 applications (CryptoSlate, 2026).
Read: The dangers of over-regulating crypto
The European Union’s 21st Russia sanctions package, announced on July 23, 2026, established a framework for banning crypto-asset services in third countries that act as evasion platforms (Council of the European Union, 2026). These are responsible measures. Blending the entire asset class with the 1% that misuses it is not.
Where the tool outshines the current system
The responsible comparison is not one of crypto against morality; it is about crypto versus the existing rails that the people in this region rely upon.
Over a billion adults are without bank accounts, and many more are inadequately served (World Bank, 2025). A SWIFT transfer for a few hundred dollars can take several days and incur fixed fees that disproportionately affect the poor.
In the Johannesburg-Harare, Johannesburg-Maputo, and Johannesburg-Blantyre corridors, a stablecoin transaction that settles in minutes at a fraction of traditional banking costs is not an ideological stance; it is simply a more efficient middle-mile solution.
The honest caveat was recorded by the Bank of Italy during live tests: the chain leg is inexpensive; however, costs and delays tend to arise during the on-ramp and cash-out phases (Banca d’Italia, 2026).
This serves as an argument for improved licensed off-ramps and expedited local settlements, including SADC’s TCIB services, rather than pretending the legacy system is adequate.
Programmable settlement aligns with the same commercial rationale as any well-structured incentive program. Escrow systems that release funds upon delivery, payroll mechanisms that prevent quiet diversions, and aid that can be traced to specific wallets all represent control systems.
These capabilities are challenging to replicate in correspondent banking, where multiple intermediaries extract fees and cause delays.
Organizations that have already moved towards paying for results instead of superficial appearances should recognize this pattern. The tool itself is not the integrity issue; it’s the design of the on- and off-ramps.
The next users won’t be humans
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The discussion is on the verge of being changed by a different kind of volume.
Autonomous software agents are unable to create current accounts at Sandton branches, undergo in-person interviews, or wait three days for a correspondent bank to process transactions.
They can maintain a wallet, present cryptographic identities, and pay a nominal fee for API calls, datasets, or computation bursts. Coinbase’s x402 protocol, currently governed as an open standard alongside card networks, cloud providers, and stablecoin issuers, transforms the long-dormant HTTP 402 “Payment Required” code into instant stablecoin settlement (Coinbase Developer Platform, 2025; Linux Foundation, 2026).
This transition is not merely theoretical; researchers report hundreds of millions of agent-to-agent transactions, nearly all in USDC, with ticket sizes that traditional credit cards cannot accommodate (Gong, 2026).
This is not just an interesting detail. Visa and Mastercard are actively developing infrastructure for machine payments due to the unsustainable economics of card transactions below approximately 30 cents. Circle’s nanopayments project aims for transfers down to one-millionth of a dollar.
Agent-to-agent marketplaces are already utilizing escrow for work, settling in stablecoins, and establishing on-chain reputation scores. Hui Gong’s 2026 research on agent-to-agent finance considers programmable settlement, smart wallets, and verifiable identity as essential infrastructure, rather than mere hobbyist overlays.
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Stablecoin has long road to mainstream payments
Don’t ignore the fact: Stablecoin usage is not going away
As software begins to act as a counterpart, three properties become essential. Settlement needs to occur 24/7 and across borders without the requirement for a human compliance officer for every micropayment. Identity must be cryptographic and portable—far beyond a PDF of a utility bill.
The audit trail must be machine-readable, as volumes will surpass what any suspicious activity team can analyze. Public blockchains, despite their governance disputes, are designed specifically for this combination. Contrarily, traditional systems were built for physical branches, batch processing, and bankers’ hours.
The transformation should not be viewed as “crypto replacing banks.” Instead, it signifies that value will shift at the speed and granularity dictated by software. Payroll between agents, procurement for computing resources, parametric insurance disbursements, inventory with self-funding capabilities, and remittances that local gatekeepers cannot exploit—all present settling challenges.
These challenges will necessitate that existing financial systems either adapt to become more programmable or witness the formation of a parallel system surrounding it. For SADC economies that already experience significant value leakage through costly corridors, this is a question of competitiveness, not a cultural clash.
Criminal activities will accompany this new stack, just as they have with advancements in the telegraph, the eurodollar, and prepaid cards. Effective responses are already evident in the takedown of Garantex and the conviction of Odarchenko: identity verification at the on- and off-ramps, ledger analytics, and coordinated enforcement against service providers specializing in maintaining opacity.
The failed response is to characterize a sub-1% illicit share as the defining feature of a technology poised to become the payment layer for machines, and that already provides a more affordable solution for miners in Rustenburg to support households in Bulawayo.
The ledger remains indifferent to our moral concerns; it will document both bribes and remittances without bias. Our task is to avoid conflating the two.
Key finding: Chainalysis estimates that 2025 illicit crypto volume is less than 1% of identified on-chain activity ($154 billion received by identified illicit addresses). TRM Labs estimates it at 1.2% ($158 billion). Traditional money laundering rates continue to hover between 2-5% of global GDP. Sub-Saharan Africa remains the most expensive remittance region worldwide.
Dr. Chris Blair serves as the group director of 21st Century.