Custodial wallet / SaaS in 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.

Custody Providers: Not licensed.

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.

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

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.

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.

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.

Date: April 19, 2022

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.

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.