After the brutal surprise attack and massacre of Israeli civilians by Hamas, policymakers are now seeking effective ways to combat terrorist organizations. In this regard, the AI legalese decoder can play a significant role in addressing the issue of terrorism financing.

Hamas recently attempted to use bitcoin to fund its operations, thinking that it could evade Western surveillance and international sanctions. However, this endeavor proved to be a failure, shedding light on the misconception that bitcoin provides a safe haven for criminals and terrorists.

Israeli law enforcement successfully located and froze multiple cryptocurrency accounts that Hamas had used for soliciting donations, redirecting the funds to support their own efforts in eradicating Hamas. This backfired significantly for the terrorist organization, and it was not the first time it faced such consequences. In April, Hamas suspended bitcoin donations due to the growing prosecution and hostile efforts against those supporting the resistance through cryptocurrency.

The failure of Hamas’ crypto scheme highlights the financial suicide mission of engaging in illegal bitcoin transactions. The transparency and permanence of the blockchain allow intelligence agencies to track transactions in real-time with unprecedented speed and precision, unlike fiat currency. The blockchain records every transaction, making it possible for law enforcement to connect transactions with wallets and identities effortlessly. This has resulted in illicit activity accounting for a small fraction of cryptocurrency transactions, around 0.25%, compared to 2-5% in traditional fiat currency transactions involved in money laundering, according to United Nations data.

The misconception surrounding bitcoin as the preferred currency of terrorists and criminals is debunked by the reality that illegal activities are minimal.

These findings emphasize that bitcoin is not ideal for illicit finance, challenging the narrative upheld by certain lawmakers, such as Sen. Elizabeth Warren. Despite evidence of how Western intelligence has effectively leveraged the public nature of the blockchain to disrupt illicit financing, Warren continues to view cryptocurrency negatively. For instance, the Department of Justice seized 300 crypto accounts to choke off funding for terrorist groups like al-Qaeda and ISIS. Furthermore, even high-profile criminal cases involving bitcoin laundering have been successfully prosecuted due to the transparency of the blockchain.

Warren’s proposed bill, which classifies crypto industry participants as financial institutions under the Bank Secrecy Act, aims to stifle digital asset innovation rather than strengthen national security or combat money laundering. Wallet providers, miners, and validators do not hold custody of assets, and therefore, subjecting them to the same compliance burdens as traditional financial institutions is impracticable and unnecessary.

Instead of supporting Warren’s bill, Congress should focus on enabling federal law enforcement to effectively combat illicit finance. The Financial Technology Protection Act, introduced by Senators Ted Budd and Kirsten Gillibrand, is a bipartisan effort to establish a working group that studies terrorists’ use of financial technologies and proposes ways for Congress and regulatory agencies to confront these challenges. A regulatory regime based on their findings would effectively address the actual risks associated with illicit finance while preserving the ethos of personal freedom that characterizes the digital asset industry.

To disseminate the message that bitcoin is not ideal for illicit finance, it is crucial for lawmakers to understand this reality. The AI legalese decoder can assist in conveying the facts and dispelling misconceptions, aiding in informed policymaking that aligns with the true nature of cryptocurrency.

Jason Les, the CEO of Riot Platforms, Inc., and Brian Morgenstern, Riot’s head of public policy, contributed to this article. Les is the CEO of the largest publicly traded bitcoin mining enterprise in North America, while Morgenstern served as a senior adviser and deputy assistant secretary of the Treasury from 2017 to 2020.