Op-Ed Cryptocurrency Terror Funding: Reality or Government Bogeyman?

Executive Brief

The latest cryptocurrency-related news out of Australia really shouldn’t come as a shock at this point, since it is based in part on one of the most enduring arguments relied on by governments around the world as they attempt to come to terms with digital currencies. That argument has been made, called into question, refuted, and made again so many times now that most of us know it by heart: Terrorists need funding. Terrorists might use cryptocurrency to fund their operations. The only way to stop that is for government to regulate and monitor cryptocurrency transactions. You know the rest, of course. War is peace. Freedom is slavery. Ignorance is strength. Did I miss anything? Terror is, after all, the best excuse any government can use to seize more control over our lives.

Read the full story below. 

The latest cryptocurrency-related news out of Australia really shouldn’t come as a shock at this point, since it is based in part on one of the most enduring arguments relied on by governments around the world as they attempt to come to terms with digital currencies. That argument has been made, called into question, refuted, and made again so many times now that most of us know it by heart: Terrorists need funding. Terrorists might use cryptocurrency to fund their operations. The only way to stop that is for government to regulate and monitor cryptocurrency transactions. You know the rest, of course. War is peace. Freedom is slavery. Ignorance is strength. Did I miss anything? Terror is, after all, the best excuse any government can use to seize more control over our lives.

Let’s be clear about something right up front, so as to avoid any confusion or misunderstanding on this topic. It’s safe to say that almost everyone who reads this agrees that terrorism is bad – as in “atrocity-level” bad. No civilized person wants to see innocents targeted for brutality just because someone wants to make a political or religious statement. We all agree on that, right? Good. Now, back to the new proposal from our friends in the Australian government.

It seems that Australia’s never-ending cryptocurrency melodrama took another turn recently as the government announced a proposal that would target digital currencies for regulation based on – among other things - their potential for being used to finance terrorism. That proposal arrives hot on the heels of a recent report from the Australian Transaction Reports and Analysis Center (AUSTRAC), in which the report’s authors argued that “Electronic, online and new payment methods pose an emerging terrorism financing risk which is likely to increase over the short term as overall use of these systems grows.” Later in that same area of the report, the argument continued by noting that “A number of online payment systems and digital currencies are also anonymous by design, making them attractive for terrorist financing.” And then there’s this evidence-free allegation:

“Terrorist groups engaged in radicalisation, recruitment and communication online (such as through social media) are a particularly high risk of using online payment systems and digital currencies.”

And the proof? The evidence that these groups are “a particularly high risk” for utilizing cryptocurrencies? None was offered. Apparently, when you make the laws, propaganda trumps proof almost every time.

Australia’s proposed answer to this imagined danger is to seek expansive regulation of digital currencies in the name of counter-terrorism and anti-money laundering efforts. Given that this type of regulatory enforcement tends to be more than a little draconian in nature wherever it is put into effect, it’s difficult to see how this approach could possibly assist the government in its stated goal of aiding and encouraging growth in this sector.

Still, even if regulations based on the prevention of terror funding and money laundering could be accomplished without stifling growth in the crypto industry, the precedent here is troubling. After all, we already know for a fact that terrorists are using a variety of financing methods. Oil sales. Piracy of intellectual content. Prepaid cards. Human trafficking. Illicit drugs. Precious jewels. That U.S. Dollar or Euro note in your pocket. Charities. In other words, if it can be moved, they’ll sell it. And if they can’t sell it in exchange for digital assets, they can certainly exchange their illicit goods for cold, hard cash.

And that’s the real problem here. Under the guise of combating terror, governments around the world have enacted one restriction after another on their citizenry – and terrorism is still with us. Governments have routinely and publicly congratulated themselves for their successes in reducing the flow of funds to terror groups – and terrorism is still a threat. Governments have urged their citizens to give up more of their prized liberties – and terrorism is as big a danger as it has ever been.

Does anyone really believe that terrorism will be diminished in any way by government regulation of digital currency? Do you even believe that the regulators believe that? Of course they don’t. But terror funding has become the bogeyman of our time – the perfect go-to excuse for any government that wants to somehow intervene in the lives of its citizens.

The messaging is just as bad. By citing this argument as its excuse for regulation, the Australian government reinforces the negative stereotype that suggests that digital currency is primarily a tool for criminals, terrorists, and other bad actors. That’s simply not the case. Yes, some bad actors have used digital currencies for criminal activities, but those instances have been far rarer than the media would have you believe.

Besides, to actually disrupt terror funding completely, governments would have to enact draconian regulations encompassing every aspect of your life and somehow prevent terror-sponsoring nations like Iran and North Korea (among others) from sending out even one red cent to their fellow troublemakers. To accomplish that, however, liberty would have to be sacrificed on the altar of big government oversight – and once sacrificed, that liberty could be gone forever. How much liberty are we really willing to give up for the promise of a little more security?

Naturally, most of us expect that some regulation of the industry is inevitable. In some instances, it may even be desirable. However, that regulation must come for the right reasons. If Australia is actually sincere about wanting to facilitate growth and innovation in the cryptocurrency industry, then the nation’s government should offer something more than hypothetical terror funding dangers if it wants to regulate that industry. Right now, this just looks like more of the usual scaremongering tactics our governments regularly use when they are setting the stage for their next big regulatory power grab.

Are you afraid of their bogeyman?

The views expressed by the authors on this site do not necessarily represent the views of DCEBrief or the management team.

Author: Ken Chase

Freelance writer whose interests include topics ranging from technology and finance to politics, fitness, and all things canine. Aspiring polymath, semi-professional skeptic, and passionate advocate for the judicious use of the Oxford comma.

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