Bitrabo Editorial
A recent report has revealed that the Islamic State (IS) group is now endorsing the use of cryptocurrency to fund its terrorist operations, provided it adheres to Sharia law principles.
According to a study by the UN’s Analytical Support and Sanctions Monitoring Team, IS associates are requesting Sharia compliance checks for the digital assets they increasingly rely on to support their activities.
This marks a significant shift as Sharia law has traditionally been at odds with cryptocurrency. The UN report highlights the detailed guidelines provided by IS to its associates regarding crypto transfers. The terror group has even established specialized channels on the Telegram messaging service such as CryptoHalal and Umma Crypto to facilitate these transactions.
Sharia Compliance in the Blockchain Space
Sharia law, based on Islamic principles, has long been incompatible with cryptocurrency due to its decentralized nature and widespread use in gambling and other illicit activities.
The UN report suggests that IS is now exploring ways to make cryptocurrencies more Sharia-compliant. Enhanced regulations and oversight could help ensure that the funds are not utilized for unlawful purposes or to fund terrorism.
Implications for the Cryptocurrency Industry
The Islamic State’s push for Sharia-compliant crypto could have significant implications for the broader bitcoin market. Increased demand for stricter control and surveillance of the crypto ecosystem may emerge if more terrorist organizations and illicit entities attempt to leverage digital assets.
Exchanges, wallet providers, and other cryptocurrency service providers may need to implement more rigorous know-your-customer (KYC) and anti-money laundering (AML) policies to prevent their platforms from being exploited for terrorist financing. This could lead to increased compliance costs and potentially restrict access to cryptocurrencies for legitimate users.
A Disturbing Trend
The escalating demand from the Islamic State for Sharia law concessions in the realm of cryptocurrencies underscores the ongoing efforts of terrorist groups to harness digital resources for malicious purposes. Regulators, law enforcement agencies, and industry stakeholders will play a crucial role in mitigating the risks associated with terrorist financing and other illicit activities as the crypto sector continues to evolve.
The UN report serves as a reminder of the importance of maintaining a robust and secure cryptocurrency environment that is resilient to misuse by malicious actors.
Featured image from Spiegel, chart from TradingView