Voices continuously appear in the global media suggesting that cryptocurrencies are a tool for financing terrorist activities. Is that really the case? According to the U.S. Treasury Deputy Secretary, Wally Adeyemo, cryptocurrencies play a relatively minor role in global terrorist financing operations. So, what is the reality of terrorist financing?
In Wally Adeyemo’s opinion, although cryptocurrencies play a significant role, they are not the dominant tool for terrorists. His comments contrast with earlier claims from Congress representatives, who alleged that cryptocurrencies financed Hamas to the tune of over 130 million dollars.
When discussing terrorist groups, sanctions, and illegal financing, Adeyemo emphasizes that cryptocurrencies “do not constitute the majority of financing sources for these groups”. However, he notes that terrorists, seeking to hide their actions, make use of new technologies, including cryptocurrencies. Despite this, the U.S. Treasury Department is determined to prevent them from becoming the main financing tool in the future.
In the past, reports from the U.S. Treasury Department indicated that the use of cryptocurrencies for money laundering “is much smaller than with traditional fiat-based methods”. Nevertheless, certain unique features of cryptocurrencies, such as peer-to-peer transactions or irreversible transactions, might make them attractive to criminals in some circumstances.
The Deputy Secretary referred to cryptocurrencies as an “evolution” in terms of money laundering by terrorism. He reminded that such practices began to change as early as 2001 when companies like PayPal and Venmo entered the market. Although many crypto firms strive for full legal compliance, there are entities in the industry that want innovation without considering its consequences.
Adeyemo emphasized that his department will use all available tools to pursue individuals or platforms that facilitate the flow of resources for terrorists.
One of the recent actions of the Treasury Department was the imposition of sanctions against the Gazan cryptocurrency exchange Buy Cash, due to its ties with terrorist groups like Hamas and ISIS.
However, it’s worth noting that while 100 members of Congress appealed to the White House to take more significant actions against cryptocurrency-financed terrorism, blockchain oversight company, Elliptic, published a post denying that Hamas received significant cryptocurrency donations.
The 130 million dollar figure cited by decision-makers originated from a Wall Street Journal article that based its estimates on Elliptic’s data.
In light of this information, one might ask: are cryptocurrencies genuinely the main problem in terrorist financing, or is it just another myth debunked by experts? In any case, one thing is certain – global authorities must be prepared for an evolution in terrorist financing methods, regardless of the tools that terrorists choose in the future.
Photo by Markus Spiske on Unsplash
