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U.S. Deputy Treasury Secretary Wally Adeyemo affirmed in a speech on Friday that cryptocurrency has a significant, yet still relatively limited, role in global terrorist financing activities.
His statements sharply contrast with assertions made by a large group of congress members earlier this month, who claimed that cryptocurrency is linked to over $130 million in funding for Hamas.
The Reality of Terror Financing
In his comments regarding terrorist organizations, sanctions, and illicit finance, Adeyemo stated that cryptocurrency is “not the vast majority of the ways that these groups are funded.”
“What we understand about terrorist organizations and those who seek to transfer money illegally is that they will utilize any new technology to accomplish that,” he remarked.
“What we will do, however, is ensure it does not become the primary method of their funding in the future,” he added.
His statements reflect those from a series of Treasury Department reports released last year, which acknowledged that the use of cryptocurrency for money laundering “remains significantly lower than that of fiat currency and more conventional methods.”
Nonetheless, cryptocurrencies possess distinct characteristics that may render them appealing to criminals in certain situations – such as peer-to-peer transactions and irreversible transfers.
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Adeyemo referred to them as an “evolution” in the efforts of terrorist money laundering, which began to transition away from traditional finance in 2001 with the emergence of platforms like PayPal and Venmo. While the majority of cryptocurrency firms continue to aim for legal compliance, the Treasury spokesperson noted that some companies in the industry “wish to innovate without considering the repercussions.”
“We will employ every available tool to target any individual or platform that facilitates the transfer of resources for terrorists,” he stated.
The Treasury imposed sanctions earlier this month against a Gaza-based cryptocurrency exchange, Buy Cash, due to its links with terrorist organizations such as Hamas and ISIS.
Crypto Terror FUD
On October 17, more than 100 members of Congress urged the White House to take further action to combat cryptocurrency-related terror financing, asserting that only a “small percentage” of cryptocurrency associated with such groups has been confiscated to date.
However, blockchain analytics firm Elliptic released a blog post on Wednesday claiming that there is “no evidence to support the assertion that Hamas has received significant volumes of crypto donations.”
The $130 million figure referenced by policymakers originated from a Wall Street Journal article that based its estimate on data from Elliptic.
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