Palestine

**No specific licensing framework:** There are no dedicated laws, regulations, or licensing procedures specifically for cryptocurrency exchanges, custody providers, or payment processors in Palestine.

**Discouragement/Prohibition:** The PMA views cryptocurrencies as high-risk, speculative, lacking legal tender status, and outside the regulated financial system. Financial institutions under PMA supervision are generally discouraged or implicitly prohibited from dealing with them.

**Exchanges:** Not licensed. Any attempt to operate a cryptocurrency exchange legally would likely face significant hurdles due to the lack of a regulatory framework and the PMA's stance.

**Payment Processors (dealing with crypto):** Not licensed. Traditional payment processors are regulated by the PMA, but this framework does not extend to processing payments directly in cryptocurrencies.

**Neither exists for crypto specifically.** Palestine does not have a "registration regime" or a "licensing regime" for virtual assets or VASPs. The de facto regime is one of **caution and unofficial prohibition** for regulated entities.

**Capital:** No specified capital requirements for crypto firms.

**AML/KYC:** Palestine has general Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) laws and regulations that apply to traditional financial institutions. However, because there's no framework for crypto, these laws are not specifically tailored or applied to crypto service providers in a licensing context. Any entity operating would still be subject to general business registration and potential scrutiny under existing AML/CFT laws if they are found to be facilitating illicit activities.

**Local Presence:** No specific requirements for local presence for crypto businesses, as they are not formally recognized or licensed.

**There is no application process** for cryptocurrency licenses in Palestine because such licenses do not exist.

**Palestine Monetary Authority (PMA) Official Website:** While a specific "crypto regulation" page is unlikely, you would look for official news, press releases, or circulars that might mention digital currencies.

**PMA News Section (for potential warnings):** https://www.pma.ps/News (You would need to search or browse historical news. Warnings regarding cryptocurrencies have been issued by the PMA over several years, notably around 2017-2018 and later.)

**General AML/CFT Law:** While not crypto-specific, any financial activity in Palestine is subject to these general laws.

**Palestinian Anti-Money Laundering Law No. 9 of 2007 (and subsequent amendments/regulations):** Details of these laws can sometimes be found on the PMA or Ministry of Justice websites, though direct English translations with stable URLs can be hard to pin down.

**Analogy to existing financial laws:** Applying general principles of traditional securities regulation, AML/CTF laws, and foreign exchange controls.

**Cautious stance:** Both the PMA and PCMA have generally adopted a cautious, if not prohibitive, stance towards cryptocurrencies due to concerns about financial stability, consumer protection, money laundering, and the absence of a clear regulatory framework.

**Initial Coin Offerings (ICOs) or Security Token Offerings (STOs):** Tokens issued to raise capital for a project or company, where investors expect a return based on the success of the project and the efforts of the issuer/team. This would include tokens representing equity, debt, or a share in future profits.

**Investment Tokens:** Tokens that grant holders rights akin to traditional securities, such as voting rights, dividends, or a share in the company's assets or revenue.

**Tokens with Management Control:** Tokens that, despite offering a utility, are primarily marketed and sold as an investment, with the value appreciating based on the efforts of the issuing entity.

**Less Likely to be Securities (but still subject to other regulations):**

**Pure Utility Tokens:** Tokens that grant access to a product or service within a network and whose primary value is their utility, rather than an expectation of profit from the issuer's efforts. (The bar for "pure utility" is often high, and many "utility" tokens might still be considered securities if they have investment characteristics).

**Stablecoins:** While generally viewed as payment instruments, their backing assets and operational structure could still raise securities concerns depending on the specific design (e.g., if they represent a share in a managed fund of assets).

**Pure Currencies:** Cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH) in their primary function as a medium of exchange, though their specific status is still debated globally. The PMA has issued warnings against dealing with unauthorized digital currencies.

**If a token were deemed a security:** An issuer would theoretically be subject to the existing requirements of the Capital Market Law (No. 12 of 2004), which include:

**Issuance through prospectus:** Requirement to prepare and submit a detailed prospectus to the PCMA for approval before offering securities to the public.

**Licensing:** Any entity involved in the issuance, underwriting, or distribution would likely need to be licensed by the PCMA.

**Disclosure:** Ongoing disclosure requirements for publicly traded securities.

**Practical Reality:** Given the lack of specific guidance and the general cautious approach, it is highly improbable that the PCMA would currently approve the issuance of a cryptocurrency token as a registered security. Any attempt to issue such tokens might be met with regulatory resistance or considered operating outside the existing legal framework.

**Unregulated Trading:** Any secondary trading of crypto tokens by Palestinian residents would occur on international exchanges or peer-to-peer, outside the direct oversight of Palestinian financial regulators.

**Palestinian Exchange (PEX):** The PEX is the regulated stock exchange in Palestine under the PCMA. No cryptocurrency tokens are listed or traded on the PEX.

**If a token were deemed a security:** Theoretically, its secondary trading would fall under the PCMA's jurisdiction, requiring listing on the PEX or another PCMA-approved market, adherence to trading rules, and involvement of licensed intermediaries. However, this is purely hypothetical without a clear legal framework.

**Warnings and Prohibitions:** The PMA has repeatedly issued warnings to financial institutions and the public against dealing with virtual currencies, citing high risks, lack of regulation, and potential for money laundering and terrorist financing. These warnings generally advise against their use as a medium of exchange or investment.

**Anti-Money Laundering (AML) / Combating Terrorist Financing (CTF):** The primary regulatory concern regarding cryptocurrencies falls under the purview of AML/CTF laws. If any entity or individual were found using cryptocurrencies for illicit activities (money laundering, terrorist financing), they would be subject to the **Anti-Money Laundering and Combating Terrorist Financing Law No. 20 of 2015**. Enforcement would target the illicit activity rather than the security classification of the token itself.

**Fraud:** Cases of cryptocurrency-related fraud or scams would fall under general criminal law, not specific crypto securities regulation.

**Relevant Law:** **Palestine Monetary Authority Law (No. 2 of 2007)** – This law governs the PMA's mandate, including maintaining monetary and financial stability, supervising banks, and regulating payment systems. The PMA's general warnings against cryptocurrencies stem from its mandate to protect the financial system.

*Note: While the PMA issues general warnings about digital currencies, these do not classify tokens as securities.*

**Palestine Capital Market Authority (PCMA):**

**Relevant Law:** **Capital Market Law (No. 12 of 2004)** – This law regulates the issuance and trading of securities, the establishment of the Palestinian Exchange (PEX), and the licensing of financial services firms. This would be the primary legal framework if crypto tokens were to be recognized and regulated as securities.

*Note: This law does not specifically mention or address cryptocurrency.*

**Anti-Money Laundering and Combating Terrorist Financing Unit:**

**Relevant Law:** **Anti-Money Laundering and Combating Terrorist Financing Law (No. 20 of 2015)** – This law defines money laundering and terrorist financing offenses, establishes reporting requirements for financial institutions, and outlines enforcement mechanisms. This law is currently the most directly applicable to the use of cryptocurrencies in Palestine, particularly concerning illicit activities.

*Note: This law addresses the misuse of funds/assets, including virtual assets, but does not define virtual assets as securities.*

**Circular No. (2020/22) regarding dealing with cryptocurrencies and virtual assets.**

**Date:** Issued on **October 25, 2020**.

**Content:** This circular explicitly instructed all banks and financial institutions operating under the PMA's supervision not to deal with, facilitate, or provide any services related to cryptocurrencies or virtual assets. The PMA cited several risks, including:

High price volatility and speculative nature.

Potential for money laundering, terrorism financing, and illicit financial activities.

Absence of a legal framework for investor protection.

**Reference (Official Circular):** Direct links to specific historical circulars on the PMA website can sometimes be challenging to locate. However, numerous reliable news outlets reported on this directive at the time of its issuance, confirming its existence and content. For example:

*PMA Press Release Archive:* While the specific circular link might be archived, the PMA frequently publishes press releases and official statements on its website that reinforce its position against cryptocurrencies. Searching the PMA's news archive might yield similar statements, such as warnings against unregistered entities.

**Prohibited for Financial Institutions:** Licensed banks and financial institutions are forbidden from facilitating crypto trading for their customers. This means individuals cannot use their bank accounts in Palestine to buy or sell cryptocurrencies directly through regulated channels.

**Individuals:** While the circular specifically targets *institutions*, it effectively makes regulated individual trading impossible within Palestine. Individuals might still acquire or hold cryptocurrencies through international platforms, but they face significant challenges in converting crypto to fiat currency or vice versa within the Palestinian financial system without resorting to informal or unregulated methods.

**No Licensed Exchanges:** There are no legally licensed or approved cryptocurrency exchanges operating within Palestine. Any entity attempting to operate a crypto exchange or related service would be in violation of PMA directives.

**Unregulated Activity:** Any crypto exchange activity occurring within Palestine would be entirely outside the formal regulatory framework and subject to the risks highlighted by the PMA, with no legal recourse or protection for participants.

**Risk-Based Approach:** VASPs must assess the sanctions risk associated with their operations, customers, and transactions. Given the geopolitical complexities and the presence of designated terrorist organizations in the Palestinian territories, transactions involving individuals or entities in Palestine are generally considered higher risk.

**Customer Due Diligence (CDD) / Enhanced Due Diligence (EDD):** Collect and verify identity information of all customers, including beneficial owners. For high-risk jurisdictions or entities, EDD measures are crucial.

**Sanctioned Entity Screening:** Screen all customers, beneficial owners, and transaction counterparties against relevant sanctions lists.

**Geographic Screening:** Identify transactions originating from, destined for, or involving sanctioned jurisdictions (though Palestine itself isn't a *sanctioned jurisdiction*, entities/individuals within it may be).

**Transaction Monitoring:** Implement systems to monitor transactions for red flags indicative of sanctions evasion or illicit finance.

**Reporting Obligations:** Report blocked property, rejected transactions, or suspicious activities to relevant authorities.

**Prohibited Transactions:** Do not engage in any transactions or provide services to sanctioned individuals, entities, or jurisdictions.

**Terrorism Sanctions Programs:** OFAC maintains robust sanctions programs targeting global terrorism, which are highly relevant to the Palestinian territories due to the presence of designated Foreign Terrorist Organizations (FTOs) and Specially Designated Global Terrorists (SDGTs).

**Hamas and Palestinian Islamic Jihad (PIJ):** Both organizations are designated by OFAC as FTOs and SDGTs. OFAC prohibits U.S. persons (and those subject to U.S. jurisdiction) from engaging in transactions with these groups or their associated networks, including fundraising, financial services, or material support.

**Associated Entities and Individuals:** OFAC frequently designates individuals and entities that act on behalf of, are owned or controlled by, or provide material support to Hamas, PIJ, or other terrorist groups, regardless of their location. This includes charities, businesses, or individuals linked to their financial networks.

**Sanctioned Entity Screening:** VASPs must screen against the **Specially Designated Nationals and Blocked Persons (SDN) List**. Any individual or entity appearing on this list is a "blocked person," and U.S. persons are generally prohibited from dealing with them.

**Geographic Restrictions:** While Palestine is not a comprehensively sanctioned country like Iran or North Korea, transactions involving areas under the control of sanctioned entities (e.g., Hamas-controlled areas in Gaza) carry significant risk and are subject to scrutiny if they involve designated persons.

**OFAC Guidance on Virtual Currency:** OFAC has issued specific guidance for the virtual currency industry, reiterating that sanctions obligations apply equally to transactions involving virtual assets. VASPs must implement sanctions compliance programs that account for the unique characteristics of crypto, such as pseudononymity and cross-border nature.

**Specially Designated Nationals (SDN) List:**

**Global Terrorism Sanctions Regulations (31 CFR Part 594):** These regulations empower OFAC to impose sanctions on terrorists and their supporters worldwide.

URL: (Search for "31 CFR Part 594" on eCFR: `https://www.ecfr.gov/current/title-31/subtitle-B/chapter-V/part-594`)

**Sanctions Compliance Guidance for the Virtual Currency Industry (OFAC, 2021):**

**Examples of Hamas-related Designations (Post-Oct 7, 2023):**

**EU Terrorist List:** The EU maintains a list of persons, groups, and entities involved in terrorist acts. Hamas (specifically its military wing, the Izz al-Din al-Qassem Brigades) and Palestinian Islamic Jihad are on this list.

**Sanctioned Entity Screening:** VASPs operating within the EU or dealing with EU persons must screen against the **EU Consolidated List of persons, groups, and entities subject to EU financial sanctions**.

**Geographic Restrictions:** Similar to OFAC, the EU does not impose blanket sanctions on Palestine. However, dealings with designated terrorist entities or individuals within the Palestinian territories are prohibited.

**EU Sanctions Map (overview of all EU sanctions regimes):**

**EU Measures to Combat Terrorism (includes the EU Terrorist List):**

**Council Common Position 2001/931/CFSP:** Defines the criteria for placing persons and entities on the EU terrorist list.

URL: (Search for "2001/931/CFSP" on EUR-Lex: `https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32001E0931`)

**Council Regulation (EC) No 2580/2001:** Concerns specific restrictive measures directed against certain persons and entities with a view to combating terrorism.

URL: (Search for "2580/2001" on EUR-Lex: `https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32001R2580`)

**UNSC Resolutions on Terrorism:** The UN maintains various sanctions regimes targeting individuals and entities associated with terrorism, most notably the ISIL (Da'esh) and Al-Qaida Sanctions Committee (Resolution 1267/1989/2253 list). While Hamas and PIJ are not directly on this specific UN list, individuals and entities linked to other designated terrorist groups that may operate or transit through the region could be.

**Implementation by Member States:** Each UN member state (including those where VASPs are licensed or operate) is responsible for enacting national legislation to enforce UN sanctions.

**UN Security Council Sanctions Committees (Overview):**

**ISIL (Da'esh) & Al-Qaida Sanctions List (includes individuals and entities associated with these groups):**

**Nexus to Sanctioned Entities:** Any transaction directly or indirectly involving a sanctioned individual or entity (e.g., funding, material support, or services to Hamas or PIJ members or affiliates) is prohibited.

**Territorial Control:** While not a blanket ban, areas under the effective control of designated groups (e.g., Gaza for Hamas) warrant extreme caution and enhanced due diligence due to the heightened risk of funds being diverted to sanctioned entities.

**Civil Penalties:** Can range from thousands to millions of dollars per violation, depending on the program, severity, and intent.

**Criminal Penalties:** For willful violations, individuals can face substantial prison sentences (e.g., up to 20 years for IEEPA violations) and multi-million dollar fines. Corporations can face fines running into hundreds of millions or billions of dollars.

**EU Member States:** Penalties are determined by national laws but typically include significant fines (often millions of Euros) and imprisonment for individuals.

**Reputational Damage:** Violations can lead to severe reputational harm, loss of licenses, and exclusion from financial systems.

**Regulator Name:** Palestinian Monetary Authority (PMA)

**Entity Targeted:** All financial institutions under PMA supervision, and by extension, the general public within its jurisdiction.

**Violation Type:** Dealing in cryptocurrencies. The PMA considers cryptocurrencies to be highly volatile, prone to speculative risks, lacking legal tender status, and a tool for money laundering and terrorism financing.

**Penalty Amount:** No specific penalty amount against an individual entity has been publicly announced by the PMA for crypto dealing. The implication is that financial institutions dealing in crypto would face regulatory sanctions (e.g., license revocation, operational restrictions) from the PMA. Individuals could face legal consequences under local laws.

**Date:** The PMA first issued a warning against dealing in cryptocurrencies in 2018 and has reiterated its prohibition multiple times, including **within the last three years**. For instance, statements reiterating caution or prohibition have been reported in 2021.

**Outcome:** Cryptocurrencies are not recognized as legal tender in Palestine, and licensed financial institutions are explicitly prohibited from dealing in them. This discourages official adoption and pushes any activity underground.

*While a direct, recent PMA press release explicitly reiterating a new enforcement action is hard to find, consistent news reporting confirms the ongoing prohibition:*

**Local news references often confirm the PMA's consistent stance:** Search for "Palestinian Monetary Authority cryptocurrency" for ongoing mentions of their prohibition.

**Regulator Name:** U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC)

**Entity Targeted:** Various individuals and entities associated with Hamas's financial network, including specific virtual currency exchanges and crypto addresses. Key targets included *Al-Qard al-Hassan* (a Lebanon-based entity linked to Hizballah but also implicated in broader terror financing networks), and individuals facilitating Hamas's crypto fundraising efforts.

**Violation Type:** Terrorism financing, providing material support to a Specially Designated Global Terrorist (SDGT) organization.

**Penalty Amount:** Sanctions (asset freezes, prohibition of transactions by U.S. persons) – not a specific dollar *fine* but a severe economic penalty. OFAC actions aim to block assets and prevent engagement with the U.S. financial system.

**Outcome:** Disruption of fundraising channels for Hamas, freezing of assets in any U.S. jurisdiction, and making it extremely difficult for designated individuals/entities to engage with the global financial system. This action highlighted the increasing use of crypto by terrorist groups and the U.S. government's intent to counter it.

**Treasury Sanctions Hizballah and Hamas Financial Facilitators and Networks:** https://home.treasury.gov/news/press-releases/jy0730

**Regulator Name:** Israeli Ministry of Defense (via the National Bureau for Counter Terror Financing - NBCTF)

**Entity Targeted:** Hamas, Palestinian Islamic Jihad, individuals and crypto wallets associated with terror financing within Gaza and the West Bank. This includes various virtual currency service providers (VCSPS) unknowingly or knowingly facilitating these transactions.

**Violation Type:** Terrorism financing, money laundering.

**Penalty Amount:** Seizure of crypto assets. Israel has reported seizing tens of millions of dollars' worth of cryptocurrency from these groups over the past few years. For example, in June 2021, over NIS 2 million (approx. $600,000) was seized, and significantly larger seizures have occurred since, especially after October 7, 2023. These are ongoing actions, with assets being forfeited to the state.

**Date:** **Ongoing from 2021 through the present (2024)**, with significant actions reported in **June 2021, February 2022, and particularly after October 7, 2023.**

**Outcome:** Deprivation of financial resources for terror organizations, disruption of their fundraising and operational capabilities, and setting a precedent for international cooperation in crypto asset seizures. These actions often involve close intelligence cooperation with international partners.

**Israel Seizes Cryptocurrency Wallets of Hamas & ISIS, Marking Major Win Against Terrorism:** https://bitcoinmagazine.com/culture/israel-seizes-cryptocurrency-wallets-of-hamas-isis (Feb 2022)

**Israel Seizes Cryptocurrencies From Hamas:** https://english.aawsat.com/home/article/3011386/israel-seizes-cryptocurrencies-hamas (June 2021, part of ongoing effort)

**Israel Seized Another 188 Crypto Accounts to Shut Down Hamas’s Fundraising:** https://www.coindesk.com/policy/2023/10/26/israel-seized-another-188-crypto-accounts-to-shut-down-hamass-fundraising/ (Post-Oct 7, 2023, illustrating ongoing seizures)