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The mainstream media – spurred on by doom-monger remarks by western policymakers – continue to issue warnings that international terrorist groups are dipping into the cryptocurrency pool to finance operations and deadly attacks.

Most recently, Svetlana Marynova – the United Nations Countering Financing of Terrorism Coordinator – reignited such concern during a speech at the UN’s Counter-Terrorism Committee (CTC) “special meeting” in India, indicating that terror outfits isolated from the “formal financial system” were turning to “new and emerging technologies” to “create opportunities for abuse.”

Subsequently, at the gathering, India’s External Affairs Minister S. Jaishankar pledged a voluntary $500,000 contribution to the UN Trust Fund for Counter Terrorism this year to “strengthen the efforts of the UN Office of Counter-Terrorism (UNOCT) to provide capacity-building support to member states in preventing and countering the threat of terrorism.”

New Delhi is especially sensitive to terror threats, ignited by its long-running conflict with Pakistan and continual concern that its neighbor uses terrorist proxies to wage war related to the fight over the governance of Kashmir.

Indeed, there is always some method embedded with the madness of messaging. The UN survives on donations from governments, entities, and individuals, and, like all organizations dependent on external goodwill, it relies on exaggerated and desperate directives to galvanize populations.

Is Crypto Really Helping to Finance Terrorism?

Moreover, Martynova acknowledged the UN is developing a blueprint for dealing with the emerging issue at an international level. And that is centered on regulating the otherwise decentralized form of digital trading.

“We have clear global standards from the Financial Action Task Force (FATF) and the resolutions of UNSC,” she said.

The FATF is considered the global standard for anti-money laundering (AML) policies for industrialized nations, and the UN repeatedly urges countries to continue to follow the established guidelines.

Much to the anxiousness of UN officials, few countries have developed or are in the midst of developing regulatory processes related to crypto, and even fewer are “successfully enforcing that regulation.” For entities like the UN, which runs on traditional monetary systems, and the world’s dominant currency – the USD – disruptors without oversight are legitimate worries.

As one finance and crypto expert explains, it all comes down to the global tussle to be the ultimate “gatekeeper” of this new and murky Blockchain-backed space. Without a centralized governing body, various entities and organizations are vying to control the crypto flow, fearful of letting go of the status quo of financing.

Further, Martynova told Bloomberg that a couple of years ago, five percent of terror attacks were connected to crypto in some shape or form, but the assumption is that the UN is now “thinking it may reach about 20 percent.” Again, these appear as offhand remarks not backed by data passed off in the press as fact.

Yet what was lost in the flurry of nervous headlines and subsequent discussions proceeding to the UN special meeting was the fact that the UN also acknowledged that the cash and hawala system – the conventional modality for moving money in the Middle East and South Asia – remains the overwhelmingly dominant method of terror underwriting.

Inflammatory headlines sell, but read through the lines, and it’s clear things are not always what they seem.

For example, four years ago, audiences were alarmed by glaring captions to the drift of “New York woman pleads guilty to using bitcoin to launder money for terror group ISIS.” Nevertheless, when you actually take a moment to read the U.S. Department of Justice documents, you see that Long Island woman, Zoobia Shahnaz, did not, in fact, send Bitcoin to the barbaric terrorist group. She purchased the popular cryptocurrency using credit cards and converted it to U.S. dollars. She then wired money through the traditional banking system to “shell entities” in Turkey, Pakistan, and China.

That is a crucial, albeit inconvenient, distinction, and indicates that outfits like ISIS are not necessarily interested in doing business in the Blockchain-backed space, where transactions are recorded on a transparent digital ledger.

Indeed, there are examples in which illicit groups are accused of dabbling in cryptocurrency, although many such cases remain devoid of actual facts.

Reports emerged in recent years about jihadists establishing a dark website entitled “Fund the Islamic Struggle without Leaving a Trace” and the book “Bitcoin wa Sadaqat al-Jihad” which spells out how to transfer Bitcoin from the west to extremist groups. While these publications have been heavily cited in academic journals, there are no names nor authors implicated, leaving open the possibility that these could be another ruse written by those not inherently involved in terror groups, and may well be outside supporters or even trap-setting investigators.

Furthermore, in June 2015, an American teen confessed to teaching ISIS operatives how to use Bitcoin and build wallets. Still, there was no additional data evidencing that the outfit actually used digital currency to finance its evil. Speculation swirled that terrorist organizations can use Bitcoin as a “ransom payment tool” to “fund terrorist attacks.” However, this was primarily framed as hypothetical across the media and academic journals, rather than a verified course of action.

If history tells us anything, governments also use the “rise in terrorism” line to crack down and further curb individual freedoms within their own country. Therefore, a moderate dose of acumen should always be applied to opinion and provocation in the news.

And there is plenty of logic to argue why cryptocurrency is not attractive to the shadowy terrorist cohorts out there. In my experience as a longtime war reporter, these members often operate in remote areas. They are especially cognizant of evading detection, typically possessing no more than an old-school flip phone, rather than a smartphone, tablet or computer – making crypto dealing a problematic task.

But even for the more wealthy or urban terror heads, dabbling in digital is not attractive due to the variation in value, the challenges in converting the digital to major currencies, the evolution in global fund monitoring, and the lack of trust in what is perceived as “western” mechanisms and technologies.

The European Parliament, for one, has acknowledged that terrorist groups seldom use crypto, stating that virtual currencies “may not present terrorist actors with substantial advantages over other methods of funding and financing they already utilize.” The EU report underscored that terrorist factions opt for more reliable and widely understood forms of exchange when hard currency is not available, such as metals or precious stones.

Similarly, Europol – the EU’s law enforcement agency – agreed in its threat assessment that terror groups may use crypto for “low-level transactions,” but their “main funding still stems from conventional banking and money remittance services.”

Leading global think tank, the RAND Corporation, pointed out that while crypto could become favorable to terrorists, it has not necessarily become a firm component of their illicit game planning.

“Current cryptocurrencies are not well matched with the totality of features that would be needed and desirable to terrorist groups, but might be employed for selected financial activities,” RAND observed.

Other experts also conclude that cryptocurrencies are too much work for terrorists.

“Virtually every onramp and offramp for digital currency is a bother. Mining crypto is resource-intensive, unpredictable, and has low-profit margins (especially during a bear market). Buying from exchanges typically requires a linked bank account and government-issued identification, which is probably a non-starter for terrorists,” notes a report in the business-centered publication QZ. “The last option—purchasing digital currency Craigslist-style—is feasible, but volumes are often too small to warrant the effort.”

The publication also highlights that crypto’s “transparency makes it ill-suited to terrorist usage.”

“Every unit of bitcoin can be tracked from wallet to wallet—it’s like having a record of all previous owners of each dollar in your pocket,” the report continues. “Ether, the second largest crypto, is similarly conspicuous. While cryptocurrencies offer censorship resistance, the places where they intersect with the real world make them as inconvenient for terrorists as they are for the rest of society. So, unless privacy coins make significant inroads, terrorists will continue to rely on the conventional financial system.”

Still, the crypto community has a self-induced social responsibility to do what it can to ensure that the emerging marketplace does not empower odious players intent on doing harm. The use of crypto by extremists in fact-based research remains rare and rudimentary, which also means it’s the perfect time for industry players to ensure it doesn’t develop into a worrying trend.

While no arena can immaculately boot bad behavior, it is vital for exchanges, wallets and firms to develop and implement sound policies and customs.

In due course, several major Blockchain-based firms, including Elliptic and Chainalysis, have developed robust mechanisms to monitor and report cybercriminals, whether terrorists, fraudsters or white-collar bandits, to help dispel the parable that crypto is a sanctuary for nefarious actors.

Countries and international organizations need to be cautious, advance their own cryptocurrency regulatory mechanisms, and prohibit terrorist financing.

Without delving into fear-mongering, now is the time.