Congressional Hearing Finds Cryptocurrency “Poor Form of Money” For Terrorists
Cryptocurrency–In a bid for the growing acceptance and education of cryptocurrency, a U.S. Congress Subcommittee on Terrorism has recently exonerated the form of digital money in relation to its use by those who would seek to do the country harm.
According to an official press release out of the U.S. House of Representatives Financial Services Committee a discussion on cryptocurrency as a possible means for fueling terrorism was held on September 7, with the title “Examining Terrorist Groups and Their Means of Financing Illicit Activity.” As opposed to perpetuating the narrative of crypto supporting illegal behavior, one first made popular in the fallout of The Silk Road court case and a diatribe most in the industry are growing weary of, the commission found that cryptocurrency made for a “poor form of money” for supplying terrorists, and that the burgeoning industry did not pose a threat to national security via its ability to fund such organizations.
While the hearing was not specifically limited to cryptocurrency, it was among the methods detailed by the commission as a possible source of funding and therefore apart of the review process that was conducted. Interestingly, the hearing did report that al-Qaeda and the Islamic State had attempted to secure funds through cryptocurrency in the past, albeit to limited results, leading the report to conclude that it was not as effective of a method for terrorist funding as some had previously believed given the global access and anonymity of the digital asset.
The hearing primarily concluded that the most pressing terrorist organizations and those most dangerous to national security are living in environments not conducive to the digital landscape of crypto. Yaya Fanusie, director of analysis for the Foundation for Defense of Democracies (FDD) Center on Sanctions and Illicit Finance, put it bluntly,
“The good news is that most terrorists, particularly those operating on jihadist battlefields, inhabit environments not currently conducive to cryptocurrency use. Still there are multiple examples of terrorist cryptocurrency funding campaigns.”
.@SignCurve to @FinancialCmte: "The good news is that most terrorists, particularly those operating on jihadist battlefields, inhabit environments not currently conducive to cryptocurrency use. Still there are multiple examples of terrorist cryptocurrency funding campaigns."
While Fanusie contended that certain terrorist groups are using or attempting to use cryptocurrency as a form of funding, cash still remains supreme as the source for raising capital, a point made repeatedly by those who defend cryptocurrency against attacks of money laundering or other illicit activity (to say nothing of established banks laundering billions for drug cartels).
As opposed to recommending a government stance against cryptocurrency that could potentially stymie the growth and innovation of the industry, Fanusie recommended a more nuanced approach. While the government has a responsibility to monitor and potentially clamp down on methods for terrorist funding, he instead took a stance that the government needs to develop better methods for analyzing cryptocurrency transactions rather than vilifying the entire industry. It also puts the U.S. ahead of the curve in the event that cryptocurrency continues towards greater adoption,
“By preparing now for terrorists’ increasing usage of cryptocurrencies, the U.S. can limit the ability to turn digital currency markets into a sanctuary for illicit finance.”
Fanusie did recommend increased scrutiny for lesser known coins that are built upon anonymity and likely the target of terrorist organizations, but otherwise advocated leaving alone larger exchanges and well known cryptocurrencies.