Hudson Institute Proposes Digital Wallets with Biometric Controls for Gaza Reconstruction

A policy paper from the Hudson Institute argues that digital wallets, underpinned by biometric identity verification, should serve as the primary financial infrastructure for Gaza’s reconstruction, offering a mechanism to ensure aid reaches civilian recipients rather than being diverted by armed groups.

The paper, authored by Zineb Riboua and Noah Firestone, frames Gaza’s pre-existing financial system as too fragile to support reconstruction even before the October 7, 2023 conflict. Digital wallet usage in Gaza expanded sharply during the war: balances grew from $40 million in January 2025 to more than $115 million by June 2025, with over 790,000 active users. One platform, iBURAQ, processed $550 million in transactions during that period, illustrating that digital payment infrastructure already exists and has been stress-tested under conflict conditions.

The Hudson Institute framework identifies biometric identification as the critical control layer in any digital wallet deployment. Without reliable identity verification, the paper argues, any digital payment system risks exploitation by Hamas through informal taxation or outright seizure. The authors address the divided governance structure between the Palestinian Authority and Hamas directly, treating it as a core design constraint, and recommend that the system architecture prevent armed groups from accessing or leveraging the financial rails built for reconstruction.

The proposal raises tensions familiar to identity and aid professionals. Last year, biometric aid distribution failures left Rohingya refugees without food support in Bangladesh, a cautionary example of what happens when identity systems and aid delivery are tightly coupled. The concept of auditable aid infrastructure is not without precedent: blockchain-based systems for auditable humanitarian aid have already been piloted by the Spanish Red Cross-backed RedChain project.

The paper is explicitly framed as input to US and Israeli policy discussions, positioning digital wallet infrastructure as an alternative to cash-based aid that is difficult to trace and easy to intercept. The authors recommend careful design to address know-your-customer gaps in Gaza’s current infrastructure, noting that reliable identity documentation for much of the population does not exist in a usable form, making the biometric layer foundational rather than supplementary to any compliant system.

The Hudson Institute analysis arrives at a moment when digital financial infrastructure is increasingly central to reconstruction governance debates. The paper does not name specific technology vendors or propose a particular biometric modality, instead focusing on the governance principles and risk controls that any deployed system would need to satisfy before it could credibly replace the informal cash economy currently operating in Gaza.

Sources: Hudson Institute

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By the ID Tech Editorial Team