In the wake of a terror attack in the Jammu and Kashmir state of India that saw the killing of over 28 civilians, including international tourists, the pressure is mounting on the Indian government to retaliate against its hostile neighbor Pakistan, whom the former accuses of sponsoring terrorism.
India and Pakistan, both nuclear-powered nations, have been at war on four instances in the past 75-odd years over geopolitical reasons.
However, in the past two decades, whenever India has been a victim of a terror attack, it has avoided going on a full-fledged war with Pakistan and rather chosen a multifaceted approach of economic disenfranchisement, international pressure, and boycott.
After the recent terror attack in Pahalgam of Jammu and Kashmir, the Narendra Modi-led Indian government will again be looking to put global pressure on Pakistan, demanding heightened surveillance and monitoring by international financial institutions and regulators, which would possibly lead to a decline in foreign investments and access to global financial markets.
India’s defense has always been the same: Pakistan exploits foreign aid to fund terrorism at Indian borders.
In that regard, crypto is definitely a sector that India must eye to dry up any foreign investment channels for the Pakistani government.
Pakistan’s Crypto Adoption and Safe Passage for Terror Funding
Recently, the Pakistani government invited Changpeng Zhao (CZ), the founder of Binance, the world’s largest cryptocurrency exchange, to Islamabad. CZ was appointed a strategic advisor to the Pakistan National Crypto Council as a step toward the country adopting cryptocurrencies.
In the words of Pakistan’s finance minister, the crypto council has been set up with the aim to promote foreign direct investment in Pakistan.
Also Read: Pakistan Crypto Council Appoints Binance Founder CZ as Advisor
Now, while there is nothing wrong with crypto adoption in Pakistan, it is also an undisputed fact that cryptocurrencies have been increasingly used by terrorists in regions across the world to fund their cause.
The inherent anonymous nature of cryptocurrencies and their decentralized nature ensure a smooth passage of funds for nefarious elements who are looking for terror funding sources. The fact that Pakistan has neither banned nor regulated crypto has added to the complications of keeping surveillance of the illegal crypto-hawala network active in the region.
A recent report by TRM shows that terrorist groups based in South Asia, especially the Islamic State Khorasan Province (ISKP) are using Monero as their favored “safe” cryptocurrency. Moreover, the report by TRM proved that terror groups are now increasingly preferring Tether (USDT) stablecoins for donations.
The survey report also revealed that several fundraising campaigns in 2022 sought cryptocurrency donations for the families of slain terrorists.
India must give two choices to Pakistan: Act on Terror Funding or face FATF blacklist
Pakistan was under the Financial Action Task Force (FATF) grey list as late as 2022 due to several terrorist groups active in the country and the government’s non-cooperative attitude in combating terror funding and money laundering. It was only recently that Pakistan’s name was removed from the FATF grey list.
If a country features on FATF’s “black or grey list,” it means heightened surveillance and monitoring by international finance institutions and watchdogs and a rapid decline in foreign investments and access to global financial markets. It was only recently that Pakistan managed to remove its name from the FATF grey list.
According to a 2022 report published in CoinDesk, the FATF had clarified that Pakistan doesn’t need to ban cryptocurrencies to evade the grey list. Given the recent terror attack in Jammu and Kashmir, India should exert international pressure on Pakistan to either abandon its ambitious cryptocurrency adoption plans or implement stringent KYC procedures for users, thereby preventing terror groups from exploiting this medium.
Conclusion
We are a crypto news media organization, and it goes against our ethos to advocate lobbying efforts against greater crypto adoption in any country. But in today’s age, we need a unified, collective effort against terrorism, and if Pakistan doesn’t walk the talk, then it is time that it is made to realize it cannot get to cherry-pick rosy aspects of crypto while conveniently ignoring the snakes breeding in its backyard.
