One of the main arguments used by cryptocurrency critics is that digital currencies make it easier to finance terrorism. But, as they say, the truth is sometimes stranger than fiction. A defense expert recently told the US Congress that it is actually harder to finance terrorists using cryptos after citing that numerous attempts by terrorist groups such as al-Qaeda and the Islamic State to raise funds using digital coins were met with dismal results.
Previous Crypto Fundraising Attempts Yield Dismal Results
Because of cryptocurrency’s anonymity, critics have always argued that it will eventually benefit terrorists. However, the director of analysis at the Foundation for Defense of Democracies Center on Sanctions and Illicit Finance, Yaya Fanusie, just shattered that myth. In a testimony before the House Financial Services Committee on Sept. 7, Fanusie told the audience that it is hard for terrorists to raise funds using cryptocurrencies, according to a report by Forbes.
To prove his point, Fanusie cited a case where a group called the Mujahideen Shura Council (MSC) gave crypto fundraising a try in a 2016 online campaign. The group only managed to secure just two contributions with a total of over $500, which highlights the fact that cryptocurrency is a poor choice of payment for jihadists.
Cryptos Complicate Terrorist Operations
In theory, cryptocurrencies would have been perfect for terrorist organizations because of their anonymity. In reality, however, terrorists usually operate in areas that are not that technologically advanced, which makes digital coins not a very practical option.
This unreliable technology infrastructure means that terrorists will have to use cash to purchase goods. Converting their cryptos to fiat currency will be a problem since it would mean that their members will have to travel to areas where Bitcoin ATMs are present, which will expose them to the risk of being discovered.
This led Yaya Fanusie to conclude that when it comes to terrorist financing, “cold hard cash is still king.”
However, Fanusie still believes that while cryptocurrencies might be a way to fund terrorists at the moment, preparation for this possibility is highly important. Major cryptocurrencies have already complied with antimoney laundering requirements, but one possible concern comes from smaller crypto exchanges as some of them allow trading of “privacy coins.”