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Cryptocurrencies

Israeli banks to lock out local cryptocurrency traders - report

Friday 9 August 2019 | 10:31 AM CET

Some USD 86 million in unpaid taxes on cryptocurrency trade earnings have piled up as local banks refuse to touch deposits, according to Israeli media Haaretz.

However, the issue is not the tax authorities. A trader Haaretz spoke with said that banks lock up funds due to anti-money laundering and know-your-customer concerns. Paying taxes with trading profits is made near impossible by banks not wanting to be mixed up in the cryptocurrency market.

In May 2019, an Israeli court ruled that Bitcoin is an asset and not a currency. Similarly, the Israeli banking industry is taking a risk-averse position. In Israel, all major banks operate under a tight cryptocurrency policy, where trading deposits are not permitted and fintechs working with cryptocurrencies are similarly blackballed.

Moreover, according to CoinDesk, Israel’s private sector acceptance of cryptocurrencies mirrors the larger Middle East, where regulatory opinion has often been slow to date, involving governmental oversight like sandbox programs. For instance, cryptocurrency exchange Rain, launched in Dubai in July 2019, following a two-year program with the central bank.

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