Cryptocurrency skeptics often cite their potential use for terror financing in their criticism of the technology. According to testimony provided to the House Financial Services Committee on Friday, however, terrorist groups have had little success in harnessing the new technology to fund their terror campaigns.
Foundation for Defense of Democracies Center on Sanctions and Illicit Finance director of analysis Yaya Fanusie told members of the Subcommittee on Terrorism and Illicit Finance that terror groups have struggled to raise cryptocurrency funds. He cited as an example the terror group Mujahideen Shura Council (MSC) in the Environs of Jerusalem. That group’s 2016 online fundraising campaign reportedly raised only $500 from two contributions.
Fanusie told the committee that “Cold hard cash is still king” because cash offers better anonymity for these types of funding campaigns. In addition, many jihadists are operating in areas of the world that often lack reliable technological infrastructure, which forces the groups to buy materials using locally-accepted hard currencies.
Nevertheless, Fanusie cautioned that the threat remains real, as many online jihadist sites are including Bitcoin in their online fundraising campaigns. He said the government must become more adept at analyzing blockchain records to help limit the risk:
“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.”