Overview
Following the attacks in Paris and San Bernardino, polls show that Americans identify terrorism—more than any other issue—as the most important problem facing the US. In this environment, some media outlets have predicted a pending “crackdown” on digital currencies, particularly by European governments, because of the risk that the technology could be used to fund terrorism.
But do digital currencies like bitcoin actually pose a unique threat when it comes to funding terrorist networks? Jason Weinstein published a post on Medium earlier this week—“Combating Bitcoin Use by Terrorists?”—that seeks to answer this question.
Jason’s post applauds governments and law enforcement for increasing scrutiny on how terrorists communicate and fund their activities. But a singular focus on digital currencies is misplaced. According to a recent report from the UK Treasury, the money laundering risk posed by digital currencies is “low.” Traditional banks, charities, and cash (of course) all pose a greater risk. The public, permanent nature of bitcoin’s distributed ledger actually makes it easier for law enforcement to “follow the money” without the need for a subpoena or cooperation from a foreign government. Law-abiding companies and emerging coalitions like the Blockchain Alliance have a crucial role to play, both by educating law enforcement, the media, and the public and by building the capacity to go after criminals and terrorists who may try to use digital currencies for nefarious purposes.