The Group of Seven industrial nations, or G7, reportedly plans on tightening the regulation of virtual currencies like bitcoin after last week’s terrorist attacks in Paris.
According to German magazine Der Spiegel, the group suspects that the Islamic State of Iraq and Syria (ISIS) has been funding its operations by secretly moving bitcoin.
The digital currency can be easily moved across borders, typically in a fashion that keeps its users anonymous. The funds reside outside the control of banks or governments.
The leaders reportedly discussed increased regulation of FinTech firms facilitating online money transfers during a private meeting at the Group of 20 (G20) summit in Antalya, Turkey on Monday.
The regulation of virtual currency has been discussed by major economies for several years, but depending on the country, progress has been limited. While bitcoin’s potential risks, including terrorist financing and money laundering, have been periodically raised, there has been little urgency to take concrete action in most jurisdictions. This all changes following the Paris attacks, the worst bloodshed in France since the Second World War.
Thus far, there is no concrete evidence that ISIS or other major terror groups use bitcoin, which is understandable considering Bitcoin’s nature. Some have raised anecdotal evidence suggesting a possible link.
Intuitively, Bitcoin can make it much easier than conventional means to anonymously move money. While bitcoin is not accepted as currency for goods in most places, especially in regions where terrorists are based, it can be endlessly and anonymously transferred around the world and cashed out on bitcoin exchanges.
It is worth noting that ISIS is widely recognized as the best funded terrorist group in history. One is therefore tempted to assume that the group and its supporters use the most liquid means possible to transfer wealth. However, other factors contributing to the group’s wealth have been well-documented.
In general, the successful funding of terrorist organizations existed long before Bitcoin.
Last year, a reported blog post linked to ISIS extolled Bitcoin and ‘Dark Wallet’ technology for their anonymizing capabilities, but subsequent reports indicated that governments were skeptical if the group indeed uses it.
More recently, a US teen who used social media to advise on how to fund ISIS with bitcoin was handed an 11-year prison sentence.