The Financial Times (FT)reported on Monday that a U.S.-led reconstruction organization for the Gaza Strip is considering introducing a dollar-pegged stablecoin.
This initiative is part of efforts to restore Gaza’s financial and payment systems, which have been devastated by war. Stablecoins are cryptocurrencies that maintain a fixed value relative to fiat currencies like the dollar, enabling digital transactions while reducing price volatility.
Sources quoted by FT explained that the aim is not to issue a Gaza coin or a new Palestinian currency. Instead, it’s intended to provide residents with a means to continue digital commerce amid cash shortages. The stablecoin is likely to be pegged to the dollar.
Following the 2023 conflict, Gaza has seen its banks and ATMs destroyed, with cash imports severely restricted. This has led to a sharp decline in the Israeli shekel’s circulation. The FT reported that this situation has led to distortions, with middlemen charging high fees to supply cash, while electronic payments are gradually gaining traction.
The expansion of digital transactions could help curb cash-based funding for armed groups. However, there are concerns that a Gaza-specific payment system might weaken economic ties with the West Bank.
Moreover, frequent power outages and limited telecommunications infrastructure are cited as practical challenges to implementing a stablecoin system. The FT noted that specific operational structures, including regulatory frameworks and approaches, have yet to be finalized.