Darknet Turns Back to Bitcoin as Privacy Coins Face Regulatory Squeeze
Bitcoin (BTC) is regaining popularity among darknet users as regulatory crackdowns choke access to privacy-centric tokens like monero (XMR), according to Chainalysis.
Eric Jardine, head of cybercrime research at the firm, told CoinDesk that delistings of XMR from major exchanges have prompted illicit markets to revert to bitcoin. “We’re seeing a significant shift back to BTC,” Jardine noted. “Monero’s fading accessibility is forcing users to fall back on what’s available.”
For years, XMR had become the favored coin on darknet platforms due to its strong privacy protections. However, those protections have also made it a target. By early 2024, Binance and OKX had removed XMR and other privacy tokens like Dash and Zcash, citing regulatory concerns and compliance reviews.
These moves have taken a toll. On-chain data from BitInfoCharts shows that monero’s transaction volume has halved in just 12 months.
“Liquidity and accessibility are key factors for any currency,” Jardine said. “Even in illicit economies, if people can’t easily acquire or use a coin, they’ll look elsewhere.”
Despite its traceability, bitcoin remains the most liquid and widely accepted cryptocurrency, making it a fallback option—even in anonymity-driven markets.
Jardine also pointed out that while crypto crime often grabs headlines, it accounts for only a fraction of total blockchain activity. Chainalysis estimates that only 0.14% of crypto transactions involve illicit activity.
Still, some of the most aggressive law enforcement responses are tied to drug trafficking. Fentanyl, in particular, draws heightened scrutiny. Recent sanctions by the U.S. Treasury targeted the Nemesis darknet market for its role in the fentanyl trade, freezing 44 BTC addresses and five XMR wallets linked to its operator.
Meanwhile, stablecoins are also in the spotlight. Groups like the T3 Financial Crime Unit—an alliance between Tron, Tether, and TRM Labs—have collectively frozen over $100 million in suspicious assets, highlighting growing industry cooperation against illicit finance.
“Despite the focus on crime, most crypto usage is legitimate,” Jardine emphasized. “We need to be careful not to let the exception define the rule.”
