TRM Labs' recent report highlights Tether's (CRYPTO:USDT) USDT as the favored stablecoin for illicit transactions in 2023, with 1.6% of its volume, amounting to $19.3 billion, linked to illegal activities.

The report indicates a slight decrease in illicit transaction volume compared to the previous year, attributing the reduction to enhanced sanctions targeting digital assets, despite USDT's continued popularity in criminal circles.

Compared to Tether's USDT, Circle’s USDC, the second-largest stablecoin, showed significantly less association with illicit activities, with only 0.05% of its transaction volume implicated.

A notable rise in terrorism financing through USDT on the Tron blockchain was observed, with a 125% increase in TRC-20 addresses linked to such activities, underscoring the preference for USDT due to its stability and low transaction fees on the Tron network.

Tether has contested the findings of the TRM Labs report, suggesting that transactional figures might be overstated due to a misinterpretation of data, emphasising the need for a nuanced understanding of transaction flows within digital asset services.