Cryptocurrencies have time and again been in the news for being a threat to the world thanks to its decentralized structure of financing. A think tank which is part of the EU parliament has published a study indicating that cryptocurrencies are not likely to be able to fund terrorists as easily as portrayed.
The report was presented by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs which conducted tests on the risks from the decentralized structure of cryptocurrencies.
The report reads-
”In their current form and at current levels of adoption, [virtual currencies] may not present terrorist actors with substantial advantages over other methods of funding and financing they already utilize.”
In a nutshell, fiat and crypto both have the same hold the same risks of financing terrorism.
On record, there have been very few activities where cryptocurrencies have successfully funded terrorist. Hence people need to remove the thought of cryptocurrency causing chaos and blood in the blood.
Certain precautions such as the EU GDPR and AML (anti-money laundering) regulations have added to cryptocurrencies being even safer than fiat.
Cryptocurrencies being anonymous and unregulated has no doubt been a cry of concern the world over given their characteristics. However, till date, no records have shown drastic financing carried out to ensure terrorists are funded well with pseudonymity.
The think tank suggests coming up with regulations which will help cryptocurrency be ideal for a peaceful world. It recommended not being too restrictive as cryptocurrencies need to keep progressing technologically to help financial activities across the globe.
The report also highlighted that cryptocurrencies differ in nature and thus guidelines should be based on the characteristics of the coins. The report stated-
”Regulators should also draft guidance that takes a nuanced approach to characterizing the risks [virtual currencies] pose in different contexts and for different purposes. For example, the illicit finance risks the traceable cryptocurrencies such as Bitcoin present is generally not as significant as that presented by privacy-focused alt-coins.”
The report called for unity between law enforcement and the cryptocurrency circle to work together to come up with a practical solution.
”The public sector cannot develop effective regulation, enhance knowledge and improve intelligence acting alone. Cooperation and interaction with businesses in the VC-industry is essential… Member States should develop dedicated fora for sharing information with local VC industry participants, including sharing of intelligence for operational purposes,” the research suggested.
The IMF in March 2018 posted on their official Blog about ‘Addressing the Dark Side of the Crypto World.’ In the blog, it was mentioned that the Financial Stability Board (FSB) was going to examine new rules needed to meet advancements in fintech while the Financial Action Task Force (FATF) will set standards to fight against terrorist financing. According to the blog, the task force had already guided countries on how to deal with cryptocurrencies.
The blog also promised that the G20 would agree to put crypto-assets on the agenda of the November 2018 summit in Argentina.
In conclusion just as the think tank from the EU parliament suggests, the IMF too welcomed cryptocurrencies true potential.
An ending of the blog read-
‘As I have said before, it would not be wise to dismiss crypto-assets; we must welcome their potential but also recognize their risks.
By working together and leveraging technology for the public good, we can harness the potential of crypto-assets while ensuring that they never become a haven for illegal activity or a source of financial vulnerability.’
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