The return of Donald Trump to the White House is promising many things: mass deportations, an end to inflation, and perhaps the first cryptocurrency-friendly presidency. While the loosening of crypto regulations is music to the ears of digital asset investors and enthusiasts who poured money into his campaign, there are other unlikely potential beneficiaries of such policies – including far-right extremists and terrorist organizations who are increasingly turning to crypto to finance their activities.
Jessica Davis, a former analyst at Canada’s spy agency and the president of Insight Threat Intelligence, warns that any relaxation of cryptocurrency regulations is likely to further increase extremists’ use of these digital assets. “While the integration of crypto into the traditional financial system is not a nefarious goal, steps to do so, without proper regulation and compliance with international counter-terrorist financing standards, will make it easier for terrorists to raise and move funds for their purposes,” Davis explains.
Extremist Groups Already Embracing Crypto
The use of cryptocurrency by terrorists and extremists is not a new phenomenon. In recent years, a wide range of groups, from American neo-Nazis to Hamas, have tapped into the anonymity offered by crypto to solicit donations. The Base, a neo-Nazi group designated as a terrorist organization and currently under FBI investigation, was openly soliciting cryptocurrency funds for paramilitary training supplies on election day.
“Supporters! We at the Base received some donations and we are quite happy as we are purchasing blanks and blank firing adapters for AR-15s so members can train in small unit tactics,” a post on one of the group’s encrypted messaging channels read, before listing out an array of desired military equipment and providing Bitcoin and Monero donation addresses.
Mark Dwyer, an extremism funding investigator at the Anti-Defamation League, points out that the private sector, including many in the crypto space, has so far done little to curb extremist financing. “Certain portions of the private sector have failed to act for years,” he notes. “There is no regulatory oversight when it comes to extremist financing that would encourage those private sector actors to act.”
Exploiting Anonymous Transactions
Extremist groups are actively educating their members and followers on how to exploit the pseudo-anonymity offered by many cryptocurrencies to avoid being identified. One neo-Nazi publication affiliated with the disbanded Atomwaffen Division advised: “Do not send us Bitcoin from exchanges such as Coinbase. The only purpose for Coinbase and other exchanges is to easily buy Bitcoin for cheap then send it to your independent wallet for sending to us.”
Joshua Fisher-Birch, an analyst at the Counter Extremism Project, explains that extremist entities have requested crypto donations for a wide range of purposes, from purchasing equipment and producing propaganda to covering travel, legal, and prisoner support costs. “Crypto is attractive to the extreme right because it is easy to create a wallet and solicit donations online,” he says, noting the rising popularity of privacy-focused coins like Monero among these groups.
Balancing Innovation and Security
As the incoming Trump administration signals its intent to take a more laissez-faire approach to cryptocurrency regulation, policymakers will need to grapple with the challenge of fostering innovation in this burgeoning sector while mitigating the risks of illicit exploitation. Davis stresses the importance of robust anti-money laundering and counter-terrorist financing regulations in the crypto space.
“Any steps to integrate cryptocurrency into the traditional financial system must be accompanied by proper regulation and compliance with international standards designed to combat terrorist financing,” she asserts. “Failure to do so will only make it easier for extremists to abuse these technologies for their malicious ends.”
As the Trump administration begins to chart its course on cryptocurrency policy, it will need to carefully weigh the potential benefits of a more permissive regulatory environment against the very real risks of inadvertently aiding some of the most dangerous elements of society. The decisions made in the coming months and years could have far-reaching implications – not just for the future of digital assets, but for national security and the fight against extremism.
