A recent RAND Corporation report suggests that it is unlikely that terrorists are using cryptocurrencies to fund their activities. RAND’s analysis of the issue identified six cryptocurrency properties that necessarily limit their use by these organizations, including anonymity, usability, security, acceptance, reliability, and volume.
The 99-page report also examined various terror groups and their preferred financing methods. The most well-known groups – Al Qaeda, ISIS, and others have apparently relied largely on cash to fund terror activities, rather than opting for cryptocurrencies.
Of the three primary terror financing concerns outlined in the report – receiving, managing, and spending funds RAND concluded that cryptocurrency’s only real value at this point in time is in the receipt of financing. Even there, however, the report found disadvantages for the groups receiving the crypto – since large volumes of digital currencies might be hard for them to either manage or spend.
Many of the obstacles preventing more widespread crypto use by terrorists involve how these actors use that money. Those activities typically include buying weapons, funding propaganda, or acquiring property – none of which are easy to do with existing cryptocurrencies.
In its conclusion, RAND suggested that cryptocurrency’s use by terrorists is not a serious problem at this point in time, but acknowledged that improvements in digital currency technology could eventually present challenges for counter-terrorist financing efforts:
Current concerns about cryptocurrency as a significant enabler of terrorist groups are almost certainly overblown, but coming improvements in cryptocurrency technologies will likely have a significant long-term effect on CTF. The speed at which these technologies are adopted, and the details of which technologies are used and how they are deployed, are critical uncertainties that have important operational impacts. These operational challenges are partly extending current methods of CTF and partly adapting methods from computer security.