Bitcoin Does Not Facilitate Terrorist Financing, Report Says

Government officials have always been keen on linking bitcoin to money laundering and terrorist financing. Even though none of those claims have ever been proven or verified, very few people seemed to make a fuss about it. A new UK report into this matter goes to show there is no reason to think bitcoin is involved in these malicious schemes by any means.

Bitcoin is Not A Terrorist Financing Tool

Ever since bitcoin started gaining popularity, claims have been made as to how this “anonymous” currency facilitates terrorist financing. That has always been a very disturbing claim, even though there was never any solid evidence to back up these claims by any means. In fact, this particular UK report goes to show how cryptocurrency is not used by terrorists, and most likely never will.

It is evident government officials overreact when they are greeted with new and innovative technologies. Particularly when these innovations take place in the financial sector. Terrorist financing has been a thorn in the side of government officials for quite some time now, yet they are no step closer to finding out where the money is coming from. Blaming bitcoin and other cryptocurrencies for this issue is a logical conclusion, even though officials are incapable of providing this is happening.

These claims started to become more apparent earlier in 2017. Indonesia’s AML and CTF agency claimed they uncovered a bitcoin transaction between various members of Daesh. While it is not unthinkable some of these users indeed own bitcoin, they are as likely to own Euros, US Dollars, and other national currencies. For some reason, no one seems to make a problem of those facts, yet the government is focusing a lot of resources to making bitcoin look bad.

Additionally, the EU Parliament is looking to pass a new legislation that will bring exchanges under stricter AML and CTF regulation. All bitcoin exchanges already conduct user identity verification procedures, thus it is a bit strange to think about what could happen in the future. Do keep in mind this new regulation will not prevent people from using cryptocurrencies, yet it will allow centralized companies to increase their due diligence measures.

While these concerns can somewhat be justified, the truth of the matter is how terrorist financing via cryptocurrencies is not a big threat right now. Creating a “measured response” should be the first priority, rather than making decisions that would hinder growth for bitcoin and other cryptocurrencies. Most of the reports regarding bitcoin and terrorist financing are speculative and unspecific at best. In parallel, terrorists are embracing digitization at an accelerated pace, and cryptocurrencies could become a favorable tool for terrorist organizations in the future.

Interestingly enough, the government is most concerned about mixers and tumblers. These platforms exist to provide more anonymity to bitcoin users, as they “clean” funds in the process. That said, the most popular funding methods for terrorist activities remain accessible financial services. Student loans, public benefits, cash, and even bank transfers through corrupt institutions are among the most commonly used methods. Traditional finance poses a far bigger threat to funding terrorist activity than bitcoin ever will, that much is certain.

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