Terrorism Financing: Fiat Still Dominates, Chainalysis Report Shows
According to a recent report from blockchain analytics firm Chainalysis, terrorism financing is primarily conducted using fiat currency, debunking the claims made by anti-crypto politicians and media about the role of cryptocurrencies in such activities.
Crypto Not Favored by Terror Organizations
The report, titled “Correcting the Record,” aims to address the inaccurate methodologies used to estimate cryptocurrency’s involvement in terrorism financing. Chainalysis has found that crypto plays a minimal role in this area, although some groups like Hamas, Hezbollah, and Palestinian Islamic Jihad do raise and transfer funds using cryptocurrencies.
“Terrorism financing is a very small portion of the already very small portion of cryptocurrency transaction volume that is illicit.”
Chainalysis also noted that terrorist organizations historically rely on traditional fiat-based methods such as financial institutions, hawala, and shell companies for their primary financing. Moreover, cryptocurrencies are less suitable for terrorism financing due to their transparency on blockchains, which allows government agencies and analysis firms to collaborate and disrupt terror funding flows more effectively than with cash transactions.
Mainstream Media FUD and Inaccuracies
The US Treasury released a report on Hamas operators’ financial facilitators, citing a Bitcoin transfer. However, the amount involved was negligible. This highlights the media’s tendency to demonize crypto in their anti-crypto campaigns. Cash remains the preferred method for terrorism financing, but it doesn’t make sensational headlines like cryptocurrencies do.
Hot Take: Fiat Currency Remains the Primary Tool for Terrorism Financing
The latest report from Chainalysis confirms that fiat currency continues to be the primary choice for terrorism financing. While some terrorist groups have utilized cryptocurrencies for fundraising purposes, their overall involvement is minimal. The transparency of blockchain technology makes it easier for authorities to track and disrupt illicit funding flows, making cryptocurrencies less attractive for such activities. The media’s focus on crypto as a tool for terrorism financing is often exaggerated and misleading. Cash remains the kingpin in this realm, and it is crucial to recognize the facts rather than succumb to fear, uncertainty, and doubt (FUD).
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