Institutions have been pointing to alternative currencies as a major threat to global security, ever since the crypto trend began gaining traction. According to these crypto opponents, the anonymity and alternative channels outside traditional finance provided by digital money, enable the worst criminals in the world to fund their work.
From a pure facts point of view, it's difficult to deny cryptocurrencies are used widely by illicit organizations. Terrorist organizations, for example, use cryptocurrency to trade drugs, weapons, and other items on the black market.
Nearly a decade ago, sites such as ‘Fund the Islamic Struggle without Leaving a Trace’ began appearing on the dark web facilitating transfers of bitcoins to jihadis. Even today, the lack of regulation in the cyber domain has opened the door to many criminal and terror organizations to use crypto as a vital source of funding.
This trend is especially true in Asia and the Indo-Pacific where crypto adoption is outpacing government oversight.
But the notion that crypto is the ultimate terror funding tool is not as simple as it seems.
First off, crypto is not immune to oversight and even state-instituted rules. As many researchers have been highlighting for at least the past three years, law enforcement cooperation in cybersecurity domains and cryptocurrency markets has made de-anonymization and tracking of funds real possibilities.
Furthermore, current trends point to the cryptocurrency systems most regulated and integrated into the global system as being the most used and adopted. Platforms that are incompatible are abandoned or remain marginal because of a lack of support, which means terrorist groups and other illicit actors may find that the digital world is catering less and less to their needs.
More fundamentally, however, focusing on crypto as the primary illicit finance problem at the expense of closely monitoring traditional networks can be dangerous for the integrity of global finance.
