For a few years now, there has been an on-and-off controversy about PayPal's refusal to agree on operations in the Palestinian areas.  There were politely worded reasons tendered as to why this was not feasible, but anyone with half a brain knew that the real reason was fear of Palestinian money-laundering to support terror — that and fear of being sued.

The controversy reached a height in 2016, when groups took PayPal to task.  Why was PayPal willing to provide services to Israelis in Judea and Samaria (the settlements), which some consider "illegal" under international law, yet would not provide PayPal access to nearby Palestinians?

In 2016, in response, PayPal issued this statement:

We appreciate the interest that the Palestinian community has shown in PayPal.  While we do not have anything to announce for the immediate future, we continuously work to develop strategic partnerships, address business feasibility, regulatory, and compliance needs and requirements, and acquire the necessary local authority permissions for new market entries.

Without going into all the details, one can surmise some reasons:

1. A reluctance to get involved in an area where payments could be transferred to terrorist groups.

2. A lot of PayPal's staff are former IDF soldiers who might be reluctant.

3. Fear of lawsuit by pro-Israel groups like the Israel Law Center (Shurat Ha-Din).

PayPal has also been quick to close any account connected to BDS.

The giant US online payment service PayPal shut down the account of a major French boycott, divestment and sanctions organization targeting Israel on Friday, after being informed by The Jerusalem Post that site was in violation of France's anti-discrimination Lellouche Law, which bans discrimination based on national origin.

If the purpose of all of this was to cripple BDS, or terrorism, it may have backfired.

Anyone should have foreseen that Hamas would go to Bitcoin.

Earlier this week, the Israeli blockchain analytics firm Whitestream identified several bitcoin wallet addresses referred to on official Hamas digital media channels in public requests for donations.  One such appeal for bitcoin donations to support "the resistance" was issued on January 31, via a Telegram channel run by Abu Obeida, a spokesman for Hamas' military wing.

As the Israeli newspaper Globes reported, those wallets included a Coinbase account.

Indeed, Hamas had earlier openly declared its intention to use Bitcoin.

"The Zionist enemy is fighting the resistance by trying to cut its support by all means," the request claims, asking "all supporters of the resistance and of our just cause to support it through Bitcoin, through means that we will announce soon."

The Telegram account can be seen here.  Google translates the account ownership as "Abu Ubaida" military spokesman in the name Al-Qassam Brigades.  Whether that is a real account, or a black-op account set up by who knows whom, I do not know.

What is clear is that Hamas is now operating in crypto-currencies.

As expected, within days, the Israel Law Center (Shurat Ha-Din) threatened to sue the Coinbase cryptocurrency exchange for allowing Hamas to trade on its platform.

Cryptocurrency exchange Coinbase has been threatened with a lawsuit by an Israeli civil rights NGO Shurat HaDin (Israel Law Center) if it continues to allow Hamas to fundraise via its platform, The Jerusalem Post reports.

Bitcoin is not as anonymous as people think.

Anyone with half a brain should have known that.  The blockchain in crypto-curreny transactions carries a massive amount of information.  And there are way to trace transactions.

Using a unique clustering algorithm, Crystal can determine which bitcoin address belongs to certain users.  The solution also utilizes web crawlers and manual registration on various services to name the entities and assign them a risk score based on the type of service.  Crystal, which has assisted financial institutions and law enforcement in identifying and tracing criminal activities such as extortion and money-laundering, assigns a risk score based on every bitcoin address that has ever appeared in the blockchain.

There is no way that a crypto-currency can be as anonymous as cash...or gold.  Many exchanges (not all) now require a lot of verification before you are allowed to trade in Bitcoin.  The U.S. and the E.U. are clamping down.

Exchanges operate under stringent KYC regulations. It means they have to adhere to the Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. And apparently, the US Securities and Exchanges Commission is so tough on this issue.

Therefore, buying platforms are pushed into enforcing stringent ID verification which in turn makes it hard for beginners to buy bitcoin. ! It becomes a problem when it takes up to 5 days for your account to be verified. ...

[T]hese processes and checks make it a bit harder to buy bitcoin in the United States.

This has pushed many customers to foreign Bitcoin exchanges.

There are ways around this, but the underlying problem remains.  Bitcoin necessarily leaves an electronic footprint.

For Israel — or governments fighting money-laundering — this is a game of whack-a-mole, and the problem will not disappear.  Hamas will just find another platform or set up more temporary accounts.

I am not recommending that Israel allow PayPal as the lesser of two evils.  It may or may not be.

This problem will not go away.  Bitcoin exchanges can be set up in countries friendlier to the Arab cause.  Chile comes to mind.  Chile is borderline first-world now, with roughly half a million well educated Palestinian sympathizers, many of whom are in banking.  Chile could provide a perfect opportunity for Hamas to interface with respectable first world banking.

Chile, though it has tough banking laws, could prove to be a nightmare when it comes to tracing Palestinians accounts.  The Bank of Palestine has an office in Chile.

The world is a bit more difficult now.  The only option would be to shut down all Palestinian access to the internet.  Many here might applaud that.  I withhold comment.

Mike Konrad is the pen name of an American who wishes he had availed himself more fully of the opportunity to learn Spanish better in high school, lo those many decades ago.  He runs a website, Latin Arabia, about the Christian Arab community in South America.