Foreign terrorist groups such as Isis and al-Qaeda have failed at repeatedly trying to raise money to fund their criminal operations using crypto, according to a testimony made today at a House Financial Services Committee hearing.

Crypto Is Terrible For Terrorists, Cold Hard Cash is King

While speaking in front of Congress today at a House Financial Services Committee hearing, director of analysis for the Foundation For Defense of Democracies Center on Sanctions and Illicit Finance Yaya Fanusie explained that foreign terrorist organizations (FTOs) failed after repeatedly trying to fund their deadly criminal operations via cryptocurrencies like Bitcoin and Ethereum.

The expert on illicit financial transactions pointed out an example of a failed 2016 online campaign that saw only two total contributions being made to the Iraq-based Mujahideen Shura Council (MSC). The two transactions only amounted to roughly $500.

Fanusie further elaborated that “cold hard cash is still king” for terrorists, due to how easy it is to hide money and keep funding anonymous. Money laundering is a key concern around cryptocurrencies, especially privacy coins that can keep senders and receivers entirely anonymous. However, terrorists also need to spend raised funds on various goods and supplies, often conducting transactions in desolate locations with “unreliable technology infrastructure,” according to Fanusie. In such instances, the advanced technology powering cryptocurrencies becomes a hindrance for terrorists.

Congress was cautioned by Fanusie that crypto-based fundraising campaigns could eventually become a successful means of funding their operations, suggesting that all U.S. government agencies that focus their investigations on terrorist funding should better understand the ins and outs of cryptocurrency transactions for greater analysis.

“By preparing now for terrorists’ increasing usage of cryptocurrencies, the U.S. can limit the ability to turn digital currency markets into a sanctuary for illicit finance,” Fanusie told Congress.

Fanusie also warned Congress of the potential risks involving money laundering in relation to the aforementioned privacy coins, such as Monero, Zcash, or Dash, that allow both transacting parties to remain anonymous. He explained that although larger exchanges like Coinbase or Gemini have strict anti-money laundering policies, other exchanges are far more lax and could pose a substantial risk.

Terrorists Prefer Cash Over Crypto, Rogue Nations to the Contrary

While terrorist organizations struggle to raise funds via crypto, the rogue nations that often harbor such organizations are embracing the new technology.

Iran, among one of the nation’s former U.S. President George W. Bush famously dubbed the “Axis of Evil” has been considering launching its own national cryptocurrency backed by its fiat currency, for the sake of circumventing US-led sections against the country. Another “Axis of Evil” nation, North Korea, has also been said to earn an estimated $15 to $200 million by mining and selling cryptocurrencies like Bitcoin and Monero, according to former NSA cybersecurity official Priscilla Moriuchi.