Since the recent terrorist attacks in Paris, there have been concerns about the use of Bitcoin by the Islamic State terrorists to store and transmit funds. These concerns and doubts were further reinforced after a hacktivist group calling themselves as Ghost Security Group declared that ISIS has over $3 million in bitcoin. They claimed to have hacked into bitcoin wallet(s) belonging to the terrorist organization to gather this information.
The theory of ISIS being funded by bitcoin garnered response from the leaders of European Union nations who since then have met multiple times to discuss about this topic. The EU nations have been working on ways to control the use of bitcoin and other digital currencies by imposing strict regulations. European Union had so far been friendly towards bitcoin, with the European Court of Justice ruling in its favor in a couple of cases.
As the fate of bitcoin in European Union stays undecided, the recent report by Europol may soften the blow or even help bitcoin escape unscathed in any case. According to the report, the European Police Office (Europol) has so far not found any evidence linking bitcoin to the Paris attack carried out by ISIS on November 13, last year.
The investigation conducted by Europol along with experts from EU nations has found no evidence supporting the claims made by the hacktivist group. The review was conducted from 29th of November to 1st of December, 2015 and a report on the findings was released on January 18, 2016 at Hague. Since bitcoin became famous, there are fears of it being used by terrorist organizations to transfer funds under the radar of investigative agencies. The reaction to reports of bitcoin being used by ISIS to fund Paris attacks led the politicians and EU leaders to jump into conclusion. However given the market capitalization of bitcoin, which is a fraction considered to fiat currency (especially US dollar which is the reserve currency) makes it impractical at the moment to use bitcoin by terrorists. It is further hard for these organizations to convert it to fiat without inviting attention.
The Europol report exonerates bitcoin from the blame of being a contributing factor to the terrorist attacks on Paris.
Ref: Europol: No Confirmed Evidence Linking Islamic State to Bitcoin on Coindesk