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If by any means criminals start adopting crypto in mass (especially privacy coins), we could expect a full government crackdown on the entire industry. Which is why I think it's best for criminals to continue using Fiat for the sake of the crypto/Blockchain industry's growth worldwide. But we'll never know what will happen in the future. Thoughts?

Considering what you've said, yes. I think it would be better if criminals just continue with using fiat. (Better yet, they could stop doing crimes, but that's impossible of course.) I mean, people are just starting to adapt crypto and they're already skeptical about it because of some crimes which makes use of crypto as their instrument. If many criminals adapt it, then people might not accept crypto at all.