Cryptocurrencies as a Means of Funding Terrorism
The RAND Corporation recently released a publication examining the possibility of terrorists using cryptocurrencies to fund their organizations. Titled “Terrorist Use of Cryptocurrencies: Technical and Organizational Barriers and Future Threats,” the report focuses on two key questions. The first is understanding to what extent terrorist organizations are currently using—or not using—cryptocurrencies. The second key question examines what factors make cryptocurrencies more viable for terrorist use and more difficult for law enforcement to detect.
Specifically looking at Al Qaeda, ISIS, Hezbollah, and Narcoterrorist Organizations, the report finds that currently “there is little indication that terrorist organizations are using cryptocurrency in any sort of extensive or systematic way.” This is mostly due to the weaker security of cryptocurrencies, and their vulnerability to cyberattacks. However, the report points out the existence of “lone-wolf actors and loosely associated groups that are likely to attempt, or are already attempting, to use these systems.” Despite the current lack of cryptocurrency use on a large scale, the authors recognize that “neither the technology nor the groups are static,” and there is no certainty that the current structure is representative of what is to come.
Looking to the future, the report identifies different factors that may increase or decrease the viability of cryptocurrency usage for terrorist organizations. Some of the factors that increase viability include the rise of second-generation cryptocurrencies, which are more anonymous, a growing cryptocurrency market, and the lack of regulatory oversight on many types of transactions. On the other hand, several significant factors may decrease viability, including an increasing rate of hacks and security breaches of cryptocurrency systems, as well as the existing tension and infighting within cryptocurrencies that make the future market unclear.
The study concludes that although the current concerns of terrorists using cryptocurrencies are mostly exaggerated, the continuing technological advancements make it likely that cryptocurrencies will play a more significant role in the future. Nevertheless, the uncertainty that surrounds the cryptocurrency market makes that future difficult to predict.
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