The Role of Crypto in Terror Financing
In a speech on Friday, U.S. Deputy Treasury Secretary Wally Adeyemo acknowledged that crypto plays a minor role in global terrorist financing operations. This contradicts the claims made by numerous congresspeople who recently stated that over $130 million in Hamas terrorist funding was attributed to crypto.
The Reality of Terror Financing
Adeyemo emphasized that while terrorist groups may use new technologies like crypto to move money illicitly, it is not the primary method of funding for these groups. He stated that the goal is to prevent crypto from becoming a major source of funding for terrorists in the future. Reports from the Treasury Department also indicate that crypto’s use for money laundering is significantly lower compared to traditional fiat currency and more conventional methods.
However, Adeyemo acknowledged that cryptocurrencies possess unique attributes that can be exploited by criminals, such as peer-to-peer transfers and irreversible transactions. He referred to them as an “evolution” in terrorist money laundering efforts, which began shifting away from traditional finance after 2001 with the rise of platforms like PayPal and Venmo. While most crypto firms aim to comply with regulations, there are some industry companies that prioritize innovation without considering the consequences.
To combat this, Adeyemo affirmed that the Treasury will utilize all available tools to go after individuals or platforms facilitating the movement of resources for terrorists. As part of these efforts, sanctions were recently imposed on a Gaza-based crypto exchange called Buy Cash due to its connections with terror groups like Hamas and ISIS.
Crypto Terror FUD
In October, more than 100 members of Congress urged the White House to take stronger actions against crypto terror financing. They claimed that only a small percentage of crypto flowing through these groups has been seized thus far. However, blockchain surveillance firm Elliptic published a blog post stating that there is no evidence to support the assertion that Hamas has received significant crypto donations. The $130 million figure mentioned by policymakers was derived from an estimate based on Elliptic data in a Wall Street Journal article.
Hot Take: Crypto’s Limited Role in Terror Financing
U.S. Deputy Treasury Secretary Wally Adeyemo acknowledged that while crypto plays a minor role in global terrorist financing operations, it is not the primary method of funding for these groups. Reports indicate that crypto’s use for money laundering is significantly lower compared to traditional methods. However, Adeyemo recognized the unique attributes of cryptocurrencies that can be exploited by criminals. The Treasury will take strong measures against individuals or platforms facilitating the movement of resources for terrorists. Recent sanctions imposed on a Gaza-based crypto exchange exemplify these efforts. It is crucial to separate fact from fear, as claims of significant crypto donations to terrorist groups lack evidence.
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