FIVE MYTHS ABOUT CRYPTOTERRORSIM

UNDERSTANDING TRENDS AND MODUS OPERANDI OF TERRORISM FINANCING THROUGH CRYPTOASSETS

Abstract

Cryptocurrencies have emerged as a potential tool for terrorism financing, presenting new challenges in the fight against extremism. This article explores five prevalent myths surrounding crypto terrorism to provide a clearer understanding of how terrorists exploit digital assets. While there is evidence of terrorist groups using cryptocurrencies, such as Da'esh (ISIL) and Al-Qaida affiliates in Syria and Asia, the adoption of cryptoassets for terrorism financing remains limited compared to traditional methods. Estimates suggest that only a small portion of the illicit crypto asset ecosystem is used for terrorism financing, with the share of all crypto transaction volumes associated with illicit activity remaining at 0.34% in 2023. Despite media reports claiming that terror groups have raised over $130 million in cryptocurrencies, blockchain analysis companies contest these figures. The article emphasizes the importance of criminalizing the misuse of cryptoassets rather than the assets themselves, as they can be exploited in the same way as the official financial system. While advancements in AI and blockchain analysis have provided more precise information on terrorist use of cryptoassets, the data is retrospective and subject to change as more attributions are made in future investigations.