The Double-edged Sword: How Crypto Can Fund, Expose, or Deceive in Special Operations

“Covert Crypto: a Double-edged Sword for Special Operations,” published by Catherine Woods at the Irregular Warfare Initiative, examines how Special Operations Forces can leverage cryptocurrency at the operational and tactical level across three mission sets: covert payments, nonstandard acquisitions, and deception operations.

Woods challenges the widespread belief that crypto offers true anonymity, arguing instead that blockchain technology makes most transactions “pseudonymous” and therefore traceable. Adversaries who obtain a single wallet address can map an entire SOF network, exposing partner identities, network size, payment patterns, and operational timelines. Operators can apply countermeasures such as burner wallets, mixers, privacy coins, and peer-to-peer exchanges to protect covert activity, though some of these measures may themselves attract suspicion.

The significance for SOF is that for crypto to be a useful tool, it must be widely accepted within the local area of operations. If it is not, attempts to use it may be declined or may attract unwanted attention… some of the countries with the highest levels of crypto adoption are operationally significant for special operations, such as Ukraine and Venezuela, both of which are in the ‘top 10’ for crypto adoption in 2025.

The same public visibility of blockchain that threatens covert operations also creates opportunities for deliberate deception, enabling operators to fabricate financial signatures of guerrilla networks or frame adversary officials as foreign assets. The article concludes that SOF should build a centralized capability to manage crypto use so that individual operators do not shoulder this rapidly evolving technical burden alone.

Rather than placing the responsibility for managing this rapidly evolving and highly technical field onto operators already tasked with intense operational demands, SOF should consider establishing a centralized capability. This capability could deliver scale and specialization, continuously updating techniques as crypto and countermeasures evolve, and provisioning operators with technical infrastructure and instruction.

“Illicit Liquidity as Battlespace: Rethinking Finance in Asymmetric Conflict” by Adam Rousselle at the Small Wars Journal (July 2025) similarly argues that decentralized digital finance platforms now function as logistics and influence infrastructure in irregular conflict, enabling armed groups to fund operations, evade sanctions, and project power below the threshold of war. Rousselle advances a parallel argument to the IWI piece: the financial domain of irregular warfare demands the same analytical and operational seriousness as the kinetic domain, and practitioners must understand the architecture of crypto-enabled finance rather than treat it as a peripheral compliance issue. However, where the IWI article focuses on how SOF can wield crypto as an offensive and covert tool, Rousselle’s piece focuses on the adversarial side, urging that illicit laundering infrastructure be mapped, targeted, and degraded as enemy infrastructure in asymmetric conflict.