Terrorist Threat to Digital Currencies


These days, bitcoin and other cryptocurrencies are starring in speeches by various European officials proceeding from terrorist funding assumptions.

In late 2015, the French minister for finance, Michel Sapin, stated that the Paris attack could have been prevented had the government been able to track down small transactions, which allegedly were the payment system employed for financing of the act of terrorism.

According to the motion tabled on November 25 by three European Parliament members representing a French right-wing party, the EU member states should assume measures “to exercise stricter controls over all virtual currency exchange transactions and even to prohibit them”.

Among the latest examples of this eloquence is a statement by Kestutis Jucevicius, the director of Lithuania’s Financial Crime Investigation Service. Speaking at a press conference in the country’s capital Vilnius, he said that bitcoin may potentially benefit groups involved in trafficking arms, human beings and drugs.

Those examples come in acute contrast with various reports concerning virtual currencies compiled by several expert communities.

“There is no evidence however of IS-financing networks in existence. Despite third party reporting suggesting the use of anonymous currencies like bitcoin by terrorists to finance their activities, this has not been confirmed by law enforcement,” reads the report drafted by Europol.

“There was little evidence to indicate use by established money laundering specialists or that digital currencies played a role in terrorist financing,” reads the UK Treasury report.

Adding to the picture, the report on virtual currencies (VC) relation to terrorism by RAND Corporation, a U.S. Military-funded think tank, reads:

“ISIL’s choice of a commodity-based currency rather than a VC may be a result of the difficulties involved in deploying a VC in a politically contested territory characterized by relatively low physical infrastructure and low penetration of communications technology platforms such as smartphones.”

In this light, the behavior of some European officials and politicians may seem even reckless. Indeed, if a terrorist chieftain once hears what they say, he might think that using cryptocurrency is actually a great idea. In fact, all those speeches may actually inspire the terrorists, start using cryptocurrency, and thus give the naysayers the casus belli they may be looking for.

Terrorism is indeed a serious threat, however, some officials may use its name to attempt gaining control over financial flows beyond any regulation. While finance and security specialists are unanimous in seeing no evidence of any links between virtual currencies and terrorists, the officials stress that strict regulation or even ban of cryptocurrency are necessary as they are a viable tool for terrorist funding.

This unhealthy logic simply cannot stand up to criticism. If we follow its patterns, we would have to imprison anyone owning a knife for murder, as they surely have a viable tool for killing someone. In addition, according to the same logic, every man on the face of the Earth shall be imprisoned as well, as they most certainly have a viable tool for raping.

However, ridiculousness of banning something just because some of its features theoretically may be used for committing a crime doesn’t seem so obvious when it comes to virtual currencies. Serious people in quite expensive garments continue reiterating the same absurd idea all the same.

They surely may be concerned about the terrorist threat. However, by doing what they do, they also establish a negative attitude to virtual currencies in general as they continuously put the idea of a link between digital money and terrorism in average person’s head. Moreover, as I said before, by describing advantages of digital money for illegal actions, they indirectly urge the terrorists to consider using it for their purposes. If the terrorists eventually do so, those officials may reiterate the good old “told ya”, and then proceed with banning or restricting virtual currencies with their hands totally untied. Whether or not it is intentional, no one but them can say.

However, nowadays cryptocurrency is more likely to be mentioned in the context of terrorism funding, than actually used therein.

by Jenny Aysgarth

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