- The use of crypto by Hamas is a warning for Asian nations looking to regulate digital assets, and highlights the need for standardised laws, analysts say
- In Asia, just Singapore and Hong Kong have regulated cryptocurrency markets but scandals and collapses of crypto exchanges continue to test investors’ faith
The use of cryptocurrency by Hamas to fund its strike on Israel is likely to raise red flags in Asian countries that are framing regulations to govern the digital currency, and underscores the need for harmonising standards, analysts have said.
“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,” said Raj Kapoor, founder of India Blockchain Alliance.
Kapoor, who was a speaker at one of the G20 committee meetings on cryptocurrency assets, said the statement had not been translated into action. It was time to revisit the declaration and come up with solutions to back it, he said.
Digital-currency wallets that Israeli authorities linked to the PIJ received as much as US$93 million in cryptocurrency between August 2021 and June this year, the WSJ report said, citing analysis by crypto researcher Elliptic.
Wallets connected to Hamas received about US$41 million over a similar time period, the report added, citing research by crypto analytics and software firm BitOK that is based in Tel Aviv.
“Some countries may bring up the narrative that banning cryptocurrencies is the way forward,” said Anndy Lian, Singapore-based author of the book NFT: From Zero to Hero.
“I would argue that banning cryptocurrencies would not stop terrorist financing, but rather drive it underground and make it harder to trace and stop,” he added. “Cryptocurrencies can be traced and tracked, while fiat (currency) such as US dollars cannot.”
Singapore and Hong Kong have regulated cryptocurrency markets, but most of the governments in the region are just beginning to understand the power of cryptocurrencies that could open up new financing opportunities.
However, investors’ faith has been time and again been tested by scandals and collapses of digital exchanges.
The revelation about Hamas funding could add to public discomfort, analysts said.
“While the government recognises the economic and social potential of cryptocurrency, it is also cautious about identifying and managing risks involved, such as consumer protection and anti-money-laundering/counter-financing of terrorism,” Lian added.
But cryptocurrencies could easily be tracked down “so this may not be the best way for terrorist organisations”, said Singapore-based Branson Lee, who runs custody solution provider Custodize.com.
“Finally, there are many tools to track and trace these funds. Overall, the crypto industry remains aware of these risks and has done well since to conform to many regulations from FATF (Financial Action Task Force) to jurisdictional compliance,” he said.
Consumers in countries like Vietnam and India have been among the fastest worldwide to adapt to cryptocurrencies, but authorities in many other places have not yet found a path to govern the ecosystem effectively.
India does not have any specific cryptocurrency regulations in place, but has been working on introducing legislation.
Earlier this month, local media reported that a probe by Indian police brought to light a case where 3 million rupees (US$36,000) in cryptocurrency was stolen from the digital wallets of a Delhi-based businessman and transferred to the accounts of Hamas.
Manhar Garegret, India head at digital wallet Liminal, highlighted that Hamas had launched campaigns on social media to raise funds through cryptocurrency, but Israel used its technical know-how to block the crypto accounts.
The case of digital theft in Delhi together with the report on Hamas funding showed why each country needed to have standards for cryptocurrency regulation and use technical know-how to integrate into a global standard, Kapoor said.
“Criminals are always one step ahead, but if you reverse-engineer processes, then you can have some solutions,” he said. “Every country is vulnerable to some extent or the other.”
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”.
