An Overview of Crypto Adoption in Palestine
Cryptocurrency adoption in Palestine has faced many challenges, including bans, blockades, and a lack of support from local banks.
Without a functioning central bank in Palestine and with much of Gaza’s banking infrastructure destroyed or severely damaged, the situation for Palestinian civilians has become devastating both financially and in terms of basic survival.
In the midst of this collapse, however, cryptocurrencies have emerged as a vital lifeline for many people in Gaza.
With traditional banking systems barely operational, civilians have increasingly turned to digital currencies like Bitcoin and Tether (USDT) to support themselves and to access crucial humanitarian assistance. For many, these cryptocurrencies have become essential in keeping daily life afloat under incredibly harsh conditions.
Awareness of cryptocurrency in Palestine only began to grow around 2018. Max Keiser, a well-known Bitcoin supporter, voiced his regret that Palestine didn’t take his advice back in 2013 to adopt Bitcoin as its official currency. In his words, “Palestine could’ve bought Israel if they adopted Bitcoin.”
His statement underscores a belief that the early adoption of Bitcoin could have offered Palestine greater economic resilience. However, with recent activities in the country, it’s evident that cryptocurrency can change lives globally.
So, what’s driving this growing crypto movement? And what unique challenges do Palestinians face when using these digital assets? Let’s take a closer look at how crypto is aiding the circumstances of Palestinians.
“At least 66 percent of employment has been lost in Gaza since hostilities erupted on 7 October 2023, equivalent to 192,000 jobs.”
Current Economic Situation in Palestine
Source: Image by Freepik
The Palestinian economy, particularly in Gaza, has reached a critical point following prolonged conflict, blockades, and infrastructural destruction. In recent years, the region has faced mounting hardships, especially since the October 2023 escalations, which brought unprecedented levels of devastation.
As a result, Gaza’s GDP fell by 81%. This was primarily due to destroyed businesses, agricultural losses, and widespread property damage. As a result, much of the local economy has halted, with the majority of Gaza's productive assets and agricultural infrastructure severely impacted or destroyed.
The destruction has affected not only Gaza but also the West Bank, where business activity has declined. Even trade has faced serious disruptions due to increased restrictions and violence.
The West Bank's economy, while initially showing some growth, contracted by nearly 22% in late 2023. Heightened military activity, land confiscations, and restrictions have severely affected key sectors like tourism and commerce, particularly in East Jerusalem.
Business disruptions have been widespread, with an estimated 96% of companies reporting reduced activity. Job losses have surged, bringing unemployment to over 30%, and further constraining household incomes.
Meanwhile, financial instability is worsening, with the Palestinian Authority (PA) experiencing drastic budget shortfalls. Local revenue streams have declined sharply, and public debt now hovers around 50% of GDP, with over half of the labor force currently unemployed or underemployed.
Humanitarian organizations and the United Nations have called for international intervention to stabilize the economy and address the urgent needs of Palestinian communities. The PA's limited resources, compounded by reduced aid inflows, have left it struggling to maintain basic services and meet salary obligations.
These economic challenges show the importance of alternative financial solutions like cryptocurrency in Palestine, where traditional financial systems are largely inaccessible.
Cryptocurrencies offer civilians a potential means to access international support. They could also help them make essential purchases and stabilize their personal finances amid this severe economic distress.
Current State of Crypto Adoption in Palestine
Source: Al-Shabaka
Cryptocurrency adoption in Palestine has grown, especially as traditional financial systems continue to struggle under economic pressures and conflict. In Gaza, where banking infrastructure has faced extensive damage, digital currencies like Bitcoin and Tether (USDT) have become essential lifelines.
These cryptocurrencies enable civilians to access funds, make cross-border transactions, and receive humanitarian aid when other avenues are inaccessible. Since 2018, awareness of crypto has expanded, with local initiatives promoting it as a tool for economic resilience, despite regulatory challenges and limited local bank support.
While adoption remains in the early stages, crypto is increasingly seen as a means to overcome barriers imposed by conflict and isolation.
“Awareness of cryptocurrency in Palestine began rising significantly in 2018, following economic challenges.”
Factors Driving Crypto Adoption in Palestine
The growth of cryptocurrency in Palestine is primarily driven by economic instability, limited access to traditional banking, and high remittance costs. With a restricted financial system, cryptocurrencies provide an alternative for Palestinians to receive international aid and remittances directly.
Additionally, the resilience of digital currencies under conflict conditions makes them attractive for those seeking financial independence amid limited banking options. Crypto also offers a potential hedge against inflation and currency volatility, making it a lifeline for many in Gaza and the West Bank.
Cryptocurrency Usage in Various Sectors
Although not declared legal, cryptocurrencies have been utilized in Palestine across several sectors, including:
- Cross-border Transactions: With limited access to international banking, digital currencies enable cross-border payments, supporting families and businesses reliant on remittances.
- Digital Employment: Remote freelancers often receive crypto payments, bypassing local banking restrictions.
- Donations: Charitable organizations use crypto for direct, efficient aid transfers, allowing funds to reach Gaza despite financial blockades.
- Converting to Local Currencies: Crypto exchanges help Palestinians convert digital assets into local currencies for daily expenses, making digital currencies a practical, versatile financial tool.
Cryptocurrency Regulation in Palestine
Source: The New Arab
Cryptocurrency regulation in Palestine remains limited. The Palestinian Monetary Authority (PMA) has yet to establish comprehensive frameworks for digital currencies, though it has issued cautions around their risks. This is due to concerns about fraud, volatility, and the lack of legal oversight.
Due to restricted banking operations and a lack of legal clarity, local banks do not currently support crypto transactions, which keeps official usage largely in a gray area. Despite this, individuals continue to adopt crypto informally to bypass financial constraints.
There are ongoing discussions to create more structured guidelines, but for now, crypto adoption in Palestine remains largely unregulated and community-driven.
“Nearly 80% of Gaza’s population relies on international humanitarian aid for survival.”
Challenges Facing Crypto Adoption in Palestine
Crypto adoption in Palestine faces several challenges, including a lack of regulatory clarity, limited internet infrastructure, and restricted access to global exchanges. Without formal recognition from the Palestinian Monetary Authority (PMA), users operate without legal protections, increasing their financial risk.
Also, unstable internet and electricity in Gaza hinder reliable access to digital wallets and trading platforms. Many Palestinians also struggle to convert crypto to cash, as local banks do not support crypto-linked transactions.
These barriers make widespread adoption challenging, though individuals continue to find ways to use digital assets as a financial lifeline.
The Potential for Cryptocurrency in Palestine
Cryptocurrency holds significant potential for Palestine, offering financial inclusion and resilience in a region with restricted banking access. Digital currencies can enable Palestinians to bypass traditional financial barriers. This would facilitate cross-border transactions and provide secure, fast ways to receive remittances and aid.
For Gaza’s growing freelance sector, crypto offers a reliable payment solution in the absence of conventional banking. If regulatory support and infrastructure improve, cryptocurrency could become a transformative financial tool.
This would foster economic stability and empower Palestinian individuals and businesses to engage more freely with global markets.
“Bitcoin has grown over 200% in value in the past five years, highlighting its potential as a hedge asset in conflict zones.”
Conclusion
Cryptocurrency adoption in Palestine shows both the promise and challenges of digital finance in regions facing economic hardship and limited banking access.
While regulatory uncertainty, infrastructure limitations, and restricted local support create obstacles, Palestinians are finding innovative ways to leverage crypto for cross-border transactions, remote work payments, and humanitarian aid.
With greater regulatory support and improved infrastructure, cryptocurrencies could play a vital role in enhancing financial resilience and connecting Palestinians to the global economy. This could offer a pathway toward economic empowerment amid ongoing adversity.
