Former CIA Acting Director, Michael Morell, authored a report recently that looked into Bitcoin's use in illicit finance. In short, he found that illicit use of Bitcoin is far less than many people assume, and probably even a significantly smaller share of the bitcoin-economy than illicit use of dollars are vs global GDP.

The report states:

Based on our research and discussions with industry experts, I have confidence in two conclusions: • The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated. • The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool.

According to a recent study by blockchain analytics firm Chainalysis, illicit activity among all cryptocurrencies as a percent of total cryptocurrency activity from 2017 to 2020 was less than 1 percent. For Bitcoin specifically, blockchain analytics firm CipherTrace estimates that illicit activity makes up less than 0.5 percent of total transaction volume. ... All of this together suggests a broader point—that the illicit use of cryptocurrencies in general and Bitcoin in particular, as a share of total market activity, is certainly not higher than it is in the traditional banking system and is most likely less. The project was sponsored by a group of leading cryptocurrency innovators and investors. The terms of the engagement were that I would “call it as I see it,” with objectivity and transparency, just as I had done throughout my career as an intelligence analyst.

Mr Morell notes in the report that: "The project was sponsored by a group [link] of leading cryptocurrency innovators and investors. The terms of the engagement were that I would “call it as I see it,” with objectivity and transparency, just as I had done throughout my career as an intelligence analyst.", and further lists an extensive set of sources from a diverse and high-level group of both industry experts, and senior experts in government, regulatory bodies, and the intelligence community.