A U.S. Treasury official yesterday reconfirmed the government’s concern that cryptocurrencies are being used to fund terrorist organizations and activities.

In a speech delivered to the Annual International Conference on Counterterrorism, Under Secretary Sigal Mandelker suggested that unless appropriate legislation is implemented to regulate cryptocurrency exchanges and trading ventures, terrorists could ultimately fund their activities through digital means and go completely unnoticed. 

“While most terrorist groups still primarily rely on the traditional financial system and cash to transfer funds, without the appropriate strong safeguards cryptocurrencies could become the next frontier,” Mandelker said.

The under secretary went on to say that not taking necessary action may result in compromises to national security. As a result, the Treasury department has vowed to work with governments across the globe to ensure “non-compliant networks and fintechs do not survive,” he said.

Mandelker further claimed that terrorist organizations and their supporters “are constantly looking for new ways to raise and transfer funds without detection or tracking by law enforcement.” So a pivot to crypto would be a logical choice, according to the official.

Among the most recent examples of digital currency being used to fund terrorist activity involves one incident last February. Bitcoin funds were sent to two Hamas-owned BTC addresses via social media. By the following month, these addresses had received at least $5,000 in crypto funds. Analyses from FinCEN also suggests that remittance payments to terrorist groups average about $600 per transaction, according to Mandelker.

A similar argument suggesting crypto is behind terrorist funding emerged in a recent New York Times report, which suggested that Hamas, based in Palestine, has developed an “increasingly sophisticated campaign” to earn bitcoin funds for its projects.

Every user who visits the organization’s website, according to the Times, is given a unique bitcoin address that they can use to contribute funds towards Hamas terrorist activities. The heavy number of addresses means that funds could come from all corners of the world—not just a single source—making the donations exceedingly difficult to track and pinpoint.

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But not everyone is buying the fact that cryptocurrencies are particularly well-suited to finance terror.

The RAND Corporation, for example, published a report in March which suggested that such fears are overblown. And the cryptocurrency advocacy group Coin Center has for years taken the position that terrorist “use of cryptocurrencies is not a major risk”—a stance supported by the scrutiny such activities face from the U.S. Treasury Department and the International Monetary Fund (IMF). 

And while many terrorist groups have attempted to gain funds via crypto, many of these efforts haven’t worked given that several terrorist organizations are situated in war-torn or remote areas that don’t possess the technological means necessary for sending or receiving digital funds.

And for those that do, it’s worth noting that crypto transactions aren’t as anonymous as originally presumed, since the identities of senders and receivers can be uncovered via blockchain records.