The Homeland Security Assessment of Terrorists’ Use of Virtual Currencies Act was passed May 18. If signed into law by President Donald Trump, the DHS will work with other federal agencies to investigate whether terrorists use virtual currencies, or receive funding with them. The assessment would be completed within 120 days of the Act passing, and the results shared with state and local law enforcement agencies. Rice is a high profile Democrat in the House Counterterrorism and Intelligence Subcommittee.
While it has repeatedly been claimed terror groups such as Daesh use Bitcoin extensively — the European Union announced plans to crack down on the virtual currency following the 2015 Paris attacks — little evidence has been forthcoming to suggest this is meaningfully the case. A pertinent question may be why Daesh would need to use the currency, given the group has an established history of funding its operations via the sale of oil to countries such as Turkey, netting millions of dollars daily in the process.
Two separate reports — one produced in 2015 by the UK Treasury, another in 2017 by the Royal United Services Institute — have both concluded terror groups do not generally use virtual currencies, and are much more likely to fund their activity using easily accessible financial services (including student and payday loans, public benefits, and cash).
“Available information on terrorists’ use of cryptocurrencies is limited and anecdotal. In June 2015, the US charged a Daesh supporter for posting on Twitter about how others might use Bitcoin to fund the terror group — however, there is no indication actual transfers took place. In August 2016, a former CIA analyst published findings identifying a Palestinian media organisation, Ibn Taymiyyah — labelled by the US as having terrorist connections — as receiving small-value Bitcoin donations. Otherwise, the record is unspecific and speculative,” the latter concluded.
Moreover, a spokesperson for Rice even admitted demonstrable examples of terrorists using Bitcoin and the like were limited to a “few instances” and “not widespread,” although these examples are recent, perhaps suggesting terrorist groups — much like most virtual currency holders — are relatively new converts to the Bitcoin cause, if at all.
Dr. Kevin Curran, Professor of Cybersecurity at Ulster University, is likewise skeptical of Bitcoin’s insurrectionary connections — for the time being, at least.
“Daesh and others favor the greenback. Bitcoin’s price volatility against other currencies makes the system very risky for terrorist groups — it’s a payment method that could lose half its value in a day. We cannot say terrorist cells are using Bitcoin to a large degree,” Dr. Curran told Sputnik.
Nonetheless, he notes the anonymity of Bitcoin does make it attractive for criminals. It is demonstrably the favored payment method of choice for illicit drugs and child pornography bought via the dark web for this reason — transactions can be tricky for law enforcement agencies to track. Moreover, ransomware attacks — such as WannaCry — can be facilitated via cryptocurrencies, and denial of service strikes.
Nonetheless, Bitcoin’s anonymity is not complete — if an attack is suitably big, and law enforcement agencies have enough power behind them, cybercriminals using Bitcoin can be tracked down — when individuals convert their Bitcoins to real world currencies, they use regulated exchanges, and larger withdrawals can be detected.
Nonetheless, Dr. Curran believes it’s an “obvious” next step for terrorists to use Bitcoin. While the majority of individuals using Bitcoin presently are “speculators or geeks,” due to relatively high technological barriers to entry, it’s becoming ever-easier for lay users to master — and as it can be used for so many purposes, criminal elements are increasingly waking up to its potential.
“We will see an increase in terrorist groups using it as more and more members of the public use it. More people know about it, more and more websites accept it as a payment method, it’s becoming increasingly pervasive in the digital world. It can be used for good or bad, but I hope it’ll become a universal currency. There is no central authority with Bitcoin — no banks or financial organizations control it, the people who own it do — and users can bypass a lot of financial services fees as a result,” he adds.
Still, Dr. Curran believes there’s “no doubt” Bitcoin will be the currency of the internet in years to come. It will become more regulated, and politicians will progressively view it as a threat to mainstream financial institutions and currencies as it becomes further accepted. Moreover, he’s certain it’ll be difficult if not impossible for governments to truly put a stop to it — the internet has no borders, and national bans won’t be effective.
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