Following recent crypto-funded Hamas attacks, European lawmakers are considering tougher regulations by imposing identity checks for all cryptocurrency transactions, even those below €1,000.
A legal vacuum exploited by Hamas
Hamas is suspected of having financed its latest deadly attack in Israel via crypto. The terrorist organization, in the eyes of the EU, the United States and the United Kingdom, would have collected small sums, thus escaping the usual controls and taking advantage of continued legal vagueness.
However, despite these suspicions, the traceability inherent in blockchain seems to facilitate the authorities’ investigative work on these transactions. Cryptos would no longer be misused for criminal purposes, because criminals actually operate with other means of payment.
“ It is clear that there is a disconnect between assumptions about the role cryptos play in global financial transfers and the facts on the ground“, says Kristin Smith, CEO of the Blockchain Association.
Despite everything, fearing new attacks, the European Union is considering toughening its regulations on crypto assets. The objective is to better control financial flows and stem the diversion of funds for terrorist purposes.
These discussions follow a series of Hamas attacks in Israel which led to the freezing of its assets. However, authorities fear that flaws remain, allowing small amounts of cryptocurrencies to go unnoticed and finance new attacks.
As a reminder, Tether has already frozen 32 addresses linked to illicit activities, and the Israeli police have seized funds from Hamas wallets at Binance. However, these actions were apparently not enough to stem the threat.
Increased surveillance raises concerns
Currently, the EU anti-money laundering bill proposes that crypto companies identify users for transactions over €1,000.
However, in a closed-door meeting, some European lawmakers express concerns, suggesting that terrorist financing can also occur in small amounts.
A debated bill plans to force exchanges to identify users for transactions above €1,000, although some believe that this measure could be insufficient, prompting us to lower or remove this threshold for tracking even small amounts.
The current challenge is to find the right balance between collective security and privacy, especially given the differences of opinion on the true scale of the terrorist threat linked to cryptos.
Voices are already being raised against potentially repressive measures which would penalize an innovative sector.
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