On May 17, US Congresswoman Kathleen Rice introduced a new bill that would task the Department of Homeland Security (DHS) with conducting a threat assessment for terrorists using cryptocurrencies, such as Bitcoin, to finance their operations.
If the bill passes, which is called the “Homeland Security Assessment of Terrorists’ Use of Virtual Currencies Act”, it would task the Homeland Security to work with other federal agencies in the United States to investigate whether terrorists use cryptocurrencies, or receive funding for their cause with them. If the Act passes the Congress, the assessment should be completed within 120 days, and it is a mandatory requirement to share it with state and local law enforcement agencies. Rice is a ranking Democrat on the House Counterterrorism and Intelligence Subcommittee, where the bill passed on May 18.
According to Coleman Lamb, a spokesperson for Rice’s office, since virtual currencies are fast and efficient, there is a greater degree of anonymity, and the transactions are often difficult for law enforcement authorities to track, there is a chance that terrorists take advantage of these positive perks and use virtual currencies for their finances.
Bitcoin has been always a controversial cryptocurrency regarding the legal use of the virtual currency. On the darknet, many criminals use BTC for buying and selling narcotics, weapons, malicious software, stolen information, as well as child pornography content. However, these criminals take only a small part of the bitcoin users, many users of the currency stay within the limits of the law. For instance, if a country’s national currency loses serious value, it is a common practice that the citizens of the country invest into bitcoin.
It is not the first time that law enforcement authorities are investigating the connections between virtual currencies and terrorists. In early 2016, the Europol published a report stating that they have no evidence that ISIS or any other terrorist groups were financed by cryptocurrencies. Multiple sources accused bitcoin that it has been used for financing terrorist activities, however, no evidence was received confirming such statements.
Such claims saying that ISIS has received millions of dollars in bitcoin funding have been considered as unverifiable, and the most credible examples of ISIS-tied BTC use amount to a couple thousand dollars. However, according to previous reports, ISIS sends and receives millions of dollars per day through more traditional avenues like oil.
“The evidence suggests that terrorists’ use of virtual currencies has so far been limited to a few instances and not widespread,” Lamb admitted in an email.
“But those cases are all very recent, indicating that terrorists—like most people—are becoming more aware of and familiar with virtual currencies,” he continued.
While the federal government seeks to get ahead of what it sees as an emerging trend for terrorist organizations, some in the virtual currency community, like Zooko Wilcox, the co-founder of the Bitcoin alternative (altcoin) Zcash, which provides more anonymity than BTC, welcome the assessment as an opportunity to put the supposed link between terror and virtual currencies to bed for good.
“I think it would be good to have more data on whether it is true,” Wilcox wrote in an email to the media, saying “that criminals use Bitcoin but terrorists don’t”.