Cryptocurrency and Terror Financing: Threats and Policy Options for Pakistan

Abstract

Cryptocurrencies offer both positive and negative aspects. However, the use of cryptocurrencies for terror financing outweighs every other aspect. Its potential to be used by terrorists and hostile actors to carry out heinous acts poses a threat to global peace. It takes on a more serious form in developing countries like Pakistan, which is fighting a battle against terrorism for the last few decades. Nonetheless, now digital financing has become an undeniable reality of the modern world, it is essential to devise a comprehensive strategy for breaking the nexus between terrorism and cryptocurrencies.
This paper intends to explore the answers to the questions that why cryptocurrencies are becoming a preferred mode for terror financing. It argues that the anonymity, decentralization and operational ease of cryptocurrencies make them a preferred medium for terrorist organizations. Therefore, enhancing institutional capacity by training human resources and making dedicated efforts at the national level will prove to be instrumental in delinking terrorism and cryptocurrencies. Moreover, close collaboration between international watchdogs and national institutions is essential in mitigating the threat of the use of cryptocurrencies for militancy and terrorism.