Governments Eye Billions in Recoverable Crypto as Chainalysis Highlights Illicit On-Chain Assets

Governments worldwide exploring the creation of national cryptocurrency reserves may already have access to billions of dollars in recoverable on-chain assets, according to the latest Chainalysis Illicit Crypto Balance Report.

In its Thursday publication, the blockchain analytics firm estimated that over $75 billion worth of cryptocurrency is linked to illicit activity. Of that amount, $15 billion is held directly by illegal entities, while another $60 billion sits in wallets indirectly connected to them.

The report revealed that darknet markets and their vendors control more than $40 billion in crypto assets — a massive figure that underscores the potential scale of funds recoverable through global law enforcement efforts.

Bitcoin Still Dominates Illicit Balances as Stablecoins Rise

Chainalysis noted that Bitcoin accounts for around 75% of all illicitly held value, but emphasized the growing role of stablecoins in illegal transactions. The data arrives as several governments, including the United States, weigh integrating digital assets into their financial systems — potentially through state-backed crypto reserves.

The report referenced the Trump administration’s introduction of the Strategic Bitcoin Reserve and Digital Asset Stockpile, initiatives designed to accumulate government-held crypto via budget-neutral asset forfeiture mechanisms.

Enforcement Seizures Mark a Turning Point for Financial Oversight

Chainalysis described the trend as the beginning of a new era in financial enforcement and national asset recovery. Since all transactions are traceable on public ledgers, the firm argues that governments have an unprecedented opportunity to reclaim billions in illicit proceeds through coordinated blockchain enforcement.

“Billions of dollars in illicit proceeds are sitting on public blockchains and are theoretically seizable if authorities can coordinate action,” the report stated.

Jonathan Levin, co-founder and CEO of Chainalysis, said that the findings dramatically expand the potential of crypto asset forfeiture and could shape how governments manage and build blockchain-based reserves in the years ahead.

Recent Seizures Highlight Enforcement Momentum

In March, the U.S. Department of Justice (DOJ) seized roughly $200,000 in USDT linked to a Hamas financing operation. Meanwhile, U.K. authorities convicted a Chinese national after uncovering what they believe to be the largest crypto seizure ever recorded — 61,000 BTC worth approximately $6.7 billion.

In Canada, regulators confiscated nearly $40 million from the exchange TradeOgre, alleging that the platform operated without registration and facilitated money laundering. The move, however, sparked debate in the crypto community over potential regulatory overreach.

Crypto Crime Represents Only 0.14% of Blockchain Activity

Despite the staggering totals, Chainalysis clarified that crypto-related crime remains a tiny fraction of global activity. The firm’s 2025 Crypto Crime Report found that illicit transactions made up only 0.14% of all blockchain activity in 2024, continuing a downward trend from previous years.

By contrast, the United Nations Office on Drugs and Crime (UNODC) estimates that 2–5% of global GDP is laundered annually through traditional financial systems — a far higher proportion.

Analysts note that blockchain’s inherent transparency can make crypto crime appear more visible than it truly is, as every transaction is public and traceable, unlike cash-based movements that often go undetected.

The Convergence of Enforcement and National Strategy

As countries advance their digital asset strategies, Chainalysis suggests the boundary between law enforcement and asset management is beginning to blur. Governments recovering illicit crypto could soon find themselves managing those funds as part of official national reserves, signaling a new phase in the integration of blockchain into state financial frameworks.