Illustration shows representation of cryptocurrency Bitcoin plunge into water
Souvenir tokens representing cryptocurrency Bitcoin plunge into water in this illustration taken May 17, 2022. Reuters

The armed wing of the Palestinian Islamist group Hamas said on Thursday it would stop receiving fundraising via the crypto currency bitcoin, a method it has used for years, citing an increase in "hostile" activity against donors.

"This comes out of concern about the safety of donors and to spare them any harm," the group said in a statement late on Thursday, adding that it had seen increased efforts to prevent people and groups sending it bitcoin funds.

The group, Izz el-Deen al-Qassam Brigades, Gaza's most powerful armed faction that has fought several wars with Israel over many years, renewed its call for "continued donation to Qassam and the resistance by all available means."

Contacted by Reuters, the Israeli military declined to comment on the Hamas statement.

Policymakers and regulators across the world have for years voiced concern over the illegal use of crypto, from money laundering to the financing of terrorism. Bitcoin and other crypto tokens offer high levels of anonymity, making them attractive to criminals.

However, developments in technology that track the movement of crypto on the blockchain ledger have made it easier for authorities to identify those behind crypto transfers. Many major crypto exchanges now also run ID checks on clients.

Hamas had endorsed crypto as a fundraising method for years, previously developing sophisticated tactics to solicit bitcoin donations.

The group doesn't disclose where its financial resources come from, yet leaders have frequently mentioned donations by individuals across the Muslim world as one key source. Iran has also always been a major financial and military backer of the group, according to officials from both sides.

Hamas is designated a terrorist organization by the United States, Britain and the European Union. That means that, in the United States for instance, it is illegal to provide it with money or training, with financial firms in control of related funds obliged to report them to the authorities.

In 2020, the U.S. broke up efforts by the military wing of Hamas, al-Qaeda and Islamic State to raise funds via cryptocurrency, seizing some $2 million worth of crypto.

Gaza economist Mohammad Abu Jayyab told Reuters the Hamas decision implied they may have felt Israel could reveal the identities of donors or reach their wallets, and were therefore seeking to protect them.

"They may also have preferred to go back to old traditional methods or maybe they figured out more advanced ones," he added.