Europe Strengthens Crypto Monitoring to Counter Hamas Funding

Following the recent Hamas attacks financed via crypto, European legislators are considering tightening regulations by imposing identity checks for all cryptocurrency transactions, even those below €1,000.

A Legal Loophole Exploited by Hamas

Hamas is suspected of having financed its latest attacks in Israel via crypto. The terrorist organization, according to the EU, the United States, and the United Kingdom, is thought to have collected small sums, thus avoiding standard checks and taking advantage of a persistence of legal ambiguity.

However, despite these suspicions, the inherent traceability of the blockchain seems to facilitate authorities’ investigative work on these transactions. Cryptocurrencies would not be more diverted for criminal purposes, as criminals actually operate with other means of payment.

“It is clear that there is a gap between the assumptions about the role that cryptos play in global financial transfers and the facts on the ground”, says Kristin Smith, CEO of the Blockchain Association.

Nevertheless, fearing new attacks, the European Union is considering tightening its regulation on crypto assets. The goal is to better control financial flows and curb the diversion of funds for terrorist purposes.

These discussions follow a series of Hamas attacks in Israel that led to the freezing of its assets. However, authorities fear that loopholes remain, allowing small sums in cryptocurrency 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 apparently haven’t been enough to stem the threat.

Increased Surveillance That Raises Concerns

Currently, the European anti-money laundering bill proposes that crypto companies identify users for transactions over €1,000. 

However, at a closed-meeting, some European legislators express their concerns, suggesting that terrorism financing can also occur in small sums.

A debated bill is considering requiring exchange platforms to identify users for transactions over €1,000, even though some feel this measure might be insufficient, prompting lowering or removing this threshold to trace even small amounts.

The current challenge is to find the right balance between collective security and privacy, especially given the divergent opinions on the real extent of the crypto-related terrorist threat.

Voices are already being raised against potentially oppressive measures that would penalize an innovative sector.