For close to a year now, governments, central banks and law enforcement agencies have been quite blunt in their viewpoints that bitcoin and other digital currencies are associated with illicit transactions and criminal activities, such as money laundering and terrorism financing. The matter is now being studied by a division within the United States Department of Defense.
According to a memo obtained by the Fenton Report, the DOD’s Combatting Terrorism Technical Support Office (CTTSO) is launching an initiative to assist the military in understanding how peer-to-peer decentralized virtual currencies could pose significant threats to national security.
One of the biggest concerns that governments maintain is the element of anonymity in bitcoin transactions – each transaction is made public on the accounting ledger-style blockchain, but the names and identities of the parties involved are never revealed. This doesn’t sit well for authorities.
The CTTSO, which works under the Assistant Secretary of Defense for Special Operations, is worried that anonymous outlets can permit operators in drugs, weapons, nuclear technology and people to establish successful networks that are hidden and unseen by government bodies. However, the Treasury Department conducted a study and noted that there has been no evidence that bitcoin and other cryptocurrencies have helped finance terrorism.
“The introduction of virtual currency will likely shape threat finance by increasing the opaqueness, transactional velocity, and overall efficiencies of terrorist attacks,” the memo stated.
Other aspects on the CTTSO’s list of topics to research in relation to terrorism are Android, Motorola, social media and virtual reality.
Bitcoiners vented their frustration on Reddit and wrote in jest that the DOD could also study gold, food, the U.S. dollar, shoes and birth as possible terrorist threats and risks to national security. One individual even noted that the Sept. 11, 2001 terrorist attacks were funded with U.S. dollars.
The U.S. government is currently in the midst of figuring out a way how to regulate bitcoin. There have been many dichotomies of opinions: there have been a small number of officials who have called for bans, while there have been a small number of elected representatives that want the government to leave it alone.
Treasury Secretary Jack Lew has noted in the past that regulations are coming, while Federal Reserve Chair Janet Yellen told Congress that it does not have the authority to supervise and regulate bitcoin. The Federal Election Commission (FEC) is mulling over a proposal to permit bitcoin donations to political campaigns of up to $100.
States are starting to take the matter of cryptocurrencies in their own hands. The state of Tennessee has started a banking task force to push for consumer protection legislation that also protects the innovation in the free market. More and more states are beginning to issue consumer and investor alerts outlining the risks associated with the virtual currency.
The news that the DOD is investigating bitcoin as a possible terrorist threat doesn’t appear to be hurting the value of bitcoin. At the time of this writing, the price of bitcoin is trading at $430, still substantially lower than its all-time high of nearly $1,200 late last year.
