While the U.S. Treasury Department expressed concern that terrorist financiers could misuse digital currencies, including Libra and Bitcoin, anti-discrimination advocates say that crypto currencies are not funding terrorist activities, but rather have been adopted to bypass discriminatory practices by financial institutions.

“There is always a concern that national security laws and measures will lead to continued discrimination of Arabs and Muslims,” said Abed Ayoub, spokesperson with the American-Arab Anti-Discrimination Committee

In July, Treasury Secretary Steven Mnuchin called on money transmitters of cryptocurrency to comply with the Bank Secrecy Act (BSA) and register with the Financial Crimes Enforcement Network (FinCEN).

“There are many regulatory and supervisory questions regarding Libra virtual assets and virtual currencies,” Mnuchin said in a statement. “But I will focus primarily on the serious concerns that Treasury has regarding the growing misuse of virtual currencies by money launderers, terrorist financiers, and other bad players.”

Earlier this month, the Egyptian interior ministry coined a car explosion that killed 20 people in central Cairo an alleged terror incident.

According to a recent report from the New York Times, “government authorities and organizations that track terrorist financing have begun to raise alarms about an uptick in the number of Islamist terrorist organizations experimenting with Bitcoin and other digital coins” and that “the groups’ use of cryptocurrencies appears to be getting more sophisticated.”

However, many Arab Americans are defending the use of digital currency to overcome financial discrimination that emerged after 9/11.

“Each day we see more and more Arabs in the U.S. and abroad use crypto-currency in an effort to move away from the discrimination and profiling exhibited by banking institutions,” Ayoub told Karma.

Some Arab bank account holders are not able to use wire transfers and have had their accounts closed and assets frozen.

“Many of our impacted community members are not given an explanation as to why they were targeted,” Ayoub said. “This has led to an increased number of community members relying on cryptocurrency.”

The problem underscores the difficulty in monitoring cryptocurrencies, which operate outside traditional banking channels. 

Although there is a digital asset guidance under the BSA and FinCEN, there is no centralized way of looking at how cryptocurrencies are transacting, according to Pawneet Abramowski, adjunct professor of law at Case Western Reserve University’s Financial Integrity Institute. 

Abramowski said that more in-depth customer service due diligence would help determine if bad actors are using digital assets and for what purpose. “The companies and exchanges that are registered with FinCEN may file appropriate suspicious activity reports based on what they see, but they can’t see the complete picture,” Abramowski told Karma. “There needs to be more transparency in the transaction. We need regulators to clearly mandate it as a matter of program and procedure at cryptocurrency exchanges.”