Coinbase Takes A Stand: No Support For Hamas

In a clear stand against the misuse of cryptocurrency for illicit activities, Coinbase, the largest US crypto exchange by volume, detailed its strategy to prevent the movement of digital assets to terrorist organizations, such as Hamas, amid increasing scrutiny from Israel and other global entities. This development further emphasizes the ongoing debate about the role of cryptocurrencies in global financial systems and the necessity of stringent regulatory measures.

Coinbase Takes A Stand

In a recently published blog post, Coinbase stated, “No currency of any type – whether it’s fiat, gold, or crypto – should ever be used to support Hamas or any other terrorist organizations.” They further highlighted their dedication to thwarting the endeavors of malicious actors aiming to exploit cryptocurrencies for wrongful purposes.

To bolster its commitment, Coinbase has instituted a comprehensive compliance program that integrates Know Your Customer (KYC) checks, sanctions screening, and reporting of suspicious activities. Furthermore, the firm places significant emphasis on its collaboration with various law enforcement agencies.

Coinbase’s post elaborated on their infrastructure to combat illicit financing: “We maintain a robust compliance program, which includes KYC checks, sanctions screening, suspicious activity reporting, and strong law enforcement partnerships, to prevent and detect illicit activity on our platform. Further, blockchain analytics technology allows us to trace, report, and even prevent terrorist financing.”

Fiat Is Still The Preferred Tool By Terrorists

The post also touched on the broader context, stating that fiat currencies remain the primary financial tool for terrorist outfits. Coinbase underscored the inherent transparency of blockchain-based transactions, arguing that “Cryptocurrency’s immutable ledger system makes these types of transactions easier to trace,” and thereby serves as a deterrent against misuse.

The firm emphasized the contrast between cryptocurrencies and traditional financial systems by highlighting, “The overwhelming majority of terrorist funding still relies on traditional financial systems, like cash. Cash payments are harder to track between institutions and geographies.” By leveraging the immutable ledgers of blockchain, the firm suggests that these transactions become easier to trace, thereby acting as a deterrent to ill-intentioned actors.

Recent events have brought this issue to the forefront. In the past week, Israeli authorities have clamped down on digital assets associated with Hamas. This crackdown, coupled with the revelation that Hamas militants employed cryptocurrency to finance attacks on Israel, could potentially create hurdles for Coinbase’s lobbying efforts in the US.

Trouble For COIN

Adding to the complexity is a recent report from Berenberg Capital Markets, wherein lead analyst Mark Palmer argued that Hamas’ crypto use could blunt the impact of Coinbase lobbying efforts.

Palmer said:

While Hamas announced last April that it would no longer use crypto for fundraising due to the ability of authorities to track its movement on blockchain ledgers, we believe the recent headlines are likely to make clarity around the question of crypto’s legal status even more elusive.”

Palmer also alluded to Coinbase’s ongoing skirmish with the US Securities and Exchange Commission, suggesting that it may continue to cast a shadow over the firm’s stock price momentum.

At press time, COIN was trading at $77.46, exactly at the 100-day EMA (orange) but above the 200-day EMA (blue).

Featured image from Bankrate, chart from TradingView.com