A decision reportedly made by Tel Aviv’s Magistrate Court permits the Israeli government to seize all the cryptocurrency in more than 150 digital wallets that it has blacklisted for allegedly aiding terrorist organisations.
Israeli Defense Minister Benny Gantz claims that the court’s December 15 decision has already permitted authorities to take an additional $33,500 from digital wallets linked to the Islamist militant group Hamas, according to a December 18 report published by local Israeli media.
Before the court decision, the only digital assets that Israeli authorities could legally collect were those that had direct links to terrorist activity; additional funds in the same wallets were not permitted. Authorities took $750,000 from the wallets in December 2021.
Since 2007, Hamas has served as the de facto ruler of Palestine’s Gaza Strip, and the United States, the European Union, Israel, and the United Kingdom all categorise it as a terrorist group in whole or in part.
Hamas started requesting Bitcoin payments from its followers in January 2019 as a way to circumvent financial isolation and restrictions.
On July 9, 2021, Gantz issued a directive allowing security personnel to seize cryptocurrency accounts thought to be connected to the militant wing of Hamas. At the time, the accounts contained Tether, Ether, Dogecoin, XRP, Binance Coin, Zcash, Litecoin, and other altcoins, according to the authorities.
Israeli investigators also seized 30 cryptocurrency wallets from 12 exchange accounts connected to Hamas in February. The exact value of the cryptocurrency assets confiscated was kept a secret.
It has been established that the use of cryptocurrency in terrorism funding is comparatively insignificant. According to blockchain analytics company Chainalysis, just a small percentage of cryptocurrency funds are used for illegal purposes as of early 2022.
Israel’s Ministry of Finance published a list of suggestions for regulating digital assets in November, advancing the country’s entry into the cryptocurrency industry. According to the proposals, digital assets “that have a considerable stability or monetary effect” should be under the Bank of Israel’s supervision.
A provision to allow the Bank of Israel to accept payments of taxes on cryptocurrencies held outside of Israel is also included in the proposals. As part of the concept, a ministerial committee would be established to oversee the regulation of decentralized autonomous groups (DAO).