Well, yes, fiat is extraordinarily useful, and used, including for crime. However, there are many rules and mechanisms in place to stop fiat being used for crime (KYC, AML, CTF, ...). So, it is better suited to legitimate transactions, and worse for illegitimate ones. Lastly, fiat is indispensable in running a modern economy.

In contrast, crypto is designed (qua permissionlessness) to evade regulation. Since it's fairly crappy technology, it's also slow and inefficient and cumbersome. So, it is better suited to illegitimate transactions than to legitimate ones. Lastly, crypto is entirely dispensable.