Cryptocurrency has been a hot topic in recent years, with many governments and regulatory bodies trying to understand and manage the risks associated with its usage. In the United States, lawmakers have reintroduced a bi-partisan bill aimed at combating crypto use by terrorists and criminals.
A new bill called the Financial Technology Protection Act (FTPA), which is backed by Senators Kirsten Gillibrand and Ted Budd, as well as Congressmen Zachary Nunn and Jim Himes, proposes that the government conduct studies on the use of cryptocurrencies by terrorists and criminals for illegal activities such as money laundering and evading sanctions. The main objective of this legislation is to obtain a deeper understanding of these risks and formulate effective regulatory measures to counter them.
Creating a Working Group
The bill proposes the creation of a working group led by the US Treasury Department’s Undersecretary for Terrorism and Financial Intelligence. The group will comprise federal law enforcement and intelligence agencies, fintech, and blockchain intelligence companies from the private sector.
The FTPA is distinct from other anti-money laundering bills because it emphasizes instead the importance of comprehending the risks associated with cryptocurrencies before implementing new policies or regulations. In other words, the bill takes a “look before you leap” approach to regulating new technologies.
How Cryptocurrencies are Currently Being Used by Terrorists
Terrorist groups have been using cryptocurrencies to finance their activities for quite some time according to Forbes. In 2020, US law enforcement officials traced the flow of crypto funds associated with Hamas, Al-Qaeda, and ISIS moving in and out of cryptocurrency wallets.
As a result of this discovery, millions of dollars, over 300 crypto accounts, and four websites were seized. Although Hamas has already stopped accepting crypto donations in an attempt to cover its tracks, it cannot erase the records of transactions made on the blockchain. The breadcrumbs left in the network may likely lead law enforcement agencies to the donors.
Because of these, US lawmakers believe that a more thorough understanding of the risks posed by cryptocurrencies is a must. The inherent transparency of blockchain technology enables regulators to gain instantaneous access to the system, while the use of blockchain intelligence tools allows law enforcement agencies to monitor and trace any suspicious activities related to illegal financial transactions.
The Need for Global Cooperation
Upon analyzing the patterns of unlawful cryptocurrency usage with the aid of blockchain intelligence, the US working group intends to encourage international collaboration and uniform regulatory protocols that transcend geographical boundaries. This is vital to prevent malicious entities from easily shifting to alternative service providers located in different jurisdictions.
The Financial Technology Protection Act proposes the creation of a working group to prevent crypto use by terrorists and criminals. The group aims to gain insights into how these risks can be mitigated and develop regulatory approaches to combat them. The FTPA takes a “look before you leap” approach to regulating new technologies and seeks to promote global cooperation and consistent regulatory standards.
While cryptocurrencies are being used by terrorist organizations, blockchain intelligence tools provide law enforcement with a way to track and trace illicit funds, leading to successful seizures of funds and websites.
Giancarlo is an economist and researcher by profession. Prior to his addition to Blockzeit’s dynamic team, he was handling several crypto projects for both the government and private sectors as a Project Manager of a consultancy firm.