Regulatory Caution Among Asian Nations Amid Reports of Illicit Financing

Regulatory Caution Among Asian Nations Amid Reports of Illicit Financing

With a plethora of reports of crypto-related terrorist financing having been published in recent weeks, it’s understood that Asian nations may be looking to exercise caution when it comes to the current ongoing process of establishing regulatory guidelines for crypto.

That’s according to a report published by the South China Morning Post (SCMP) on Thursday. The use of cryptocurrency by Hamas to fund its attack on Israel is being seen as the catalyst that may drive authorities in various Asian nations to take a more cautious approach to regulating digital currencies, according to analysts cited by the publication.

Raj Kapoor, the founder of India Blockchain Alliance (IBA), commented on these recent developments, stating:

”It is a kick on the backside for most governments. All regulatory bodies will take a closer look at crypto regulation. Governments will need to start implementing new rules and regulations.”

At the recent G20 summit held in New Delhi, a joint declaration called for the regulation, supervision, and oversight of crypto assets, among other measures. The declaration emphasized the importance of supporting “a coordinated and comprehensive policy and regulatory framework.”

Kapoor stressed the importance of revisiting the declaration and developing solutions to implement its objectives.

Renewed scrutiny

Events in Palestine in recent weeks have led to renewed scrutiny when it comes to monitoring illicit financing activity via cryptocurrency. Only days following the recent Hamas attack, Israeli authorities moved to freeze specified crypto accounts.
That scrutiny has continued in recent days, with more accounts having been frozen on crypto platforms such as Binance, while more still have been identified as suspicious, with requests for further information having been submitted in respect of over 200 additional accounts.
On Wednesday it emerged that the United States Treasury’s Office of Foreign Assets Control (OFAC) had sanctioned a Gaza-based crypto platform.

Potential over-reaction

While crypto-related terrorist financing has been widely publicized, blockchain analytics firm Chainalysis warned on Wednesday that crypto’s role in this illicit activity has likely been overstated. In its blog post on the subject, the firm stated:
“Although terrorism financing is a very small portion of the already very small portion of cryptocurrency transaction volume that is illicit, some terrorist organizations raise, store, and transfer funds using cryptocurrency.”
Additionally, Chainalysis stated that it had seen “overstated metrics and flawed analyses of these terrorist groups’ use of cryptocurrency.” Peter Van Valkenburgh, Director of Research at non-profit crypto advocacy group Coin Center, also believes that reporting on the matter is not balanced. Taking to X, he stated:

“Sensational early reporting on the scale of Hamas crypto fundraising significantly misstated the amounts involved.”

Coin Center’s Director of Communications, Neeraj Agrawal, highlighted an article which claimed that crypto “fueled Hamas’ terror attack on Israel” in its title, only to reveal within the body of the article that “cryptocurrency is still far from the largest funding source for terrorism.”

Anndy Lian, a Singapore-based author and inter-governmental blockchain adviser, noted that while some countries may consider banning cryptocurrencies as a solution, this could merely drive illicit financing underground and make it more challenging to trace and halt. Lian argued that cryptocurrencies are traceable and trackable, unlike traditional fiat currencies like US dollars.


Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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