It seems Israel isn’t a huge fan of cryptocurrency… Either that or its banks are terrified of it.
Israel Gets Concerned When Crypto Enters the Mix
Money laundering and white-collar crimes are a huge concern within the nation of Israel, which seems to be making banks lock up whenever they hear the term “crypto.” Since Friday, several cryptocurrency traders have reportedly been unable to deposit funds into their digital wallets. Right now, many believe that Israeli banks have concerns regarding “know-your-customer” (KYC) practices and don’t want anything to do with the cryptocurrency business.
For the most part, however, it doesn’t appear that banks are necessarily anti-crypto or fearful of it. Rather, they are waiting for new rules on how to handle cryptocurrency transactions that have been scheduled to arrive for some time and have yet to show their faces.
Last May, the nation declared bitcoin and similar cryptocurrencies as “assets” instead of money. For three months, banks within Israel’s borders have been waiting for new regulation regarding how to handle cryptocurrencies and have thus far come up empty-handed.
Banks do not want to be exposed to financial risk, and so long as the crypto space within Israel comes without a definitive set of rules, traditional institutions do not want to get involved. Legal counsel to the Israeli Bitcoin Association Jonathan Klinger says that banks are being forced to operated under a “tight cryptocurrency policy.” Deposits are presently unacceptable, and fintech companies are facing similar scrutiny.
He’s advising that while banks don’t necessarily have to jump into the crypto space headfirst, they do need to start paving the way for customers to at least make basic deposits and withdrawals while they wait. He comments:
Cooperation from banks seems almost impossible. These actions might have been made if the policy did not originate from concerns of money laundering, but in order to eliminate competition that the cryptocurrency world has with banks.
Without Regulation, There’s Nowhere to Go
Former deputy commissioner of the Israeli Tax Authority Gidi Bar Zakay is now the CEO of Bittax. He says that the banks aren’t really at fault and says that they simply cannot operate within the cryptocurrency space unless they have clear guidance from regulators. Without the right rules in play, they don’t want to be responsible for any money laundering cases that emerge. He explains:
In the past, crypto-related capital could be transferred to some banks in some cases, but in recent years, the banks tightened their self-policy on businesses or individuals operating in the field. They are now waiting for guidelines from the Bank of Israel.
While the cryptocurrency arena has been around for roughly ten years, very few nations have developed appropriate regulation when it comes to handling crypto activity. Thus far, the only country with a full set of established rules is Japan.
Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries.
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