Leumi Bank Goes to Court over Cryptocurrencies
Israel has often been in the news with incursions in the Gaza Strip and its Prime Minister, Benyamin Netanyahu’s unfortunate proclivity to dabble in illegal and corrupt activities, which he has furiously denied every time they so much as cropped up. However, Israel is now apparently working on a cryptocurrency support.
When it comes to technological innovation, Israel has definitely been at the helm of innovative gizmos. In 2017, Israel’s start-ups and innovative companies managed to rise up as much as $5 billion in fresh money. This amounts to 10% of what China manages to rise for its own companies, and that is quite substantial. Many platforms see the love of inventors, including myriad apps and now, with the onset of crypto mania, USB flash drives.
Back in 2017, Hapoalim, Israel’s largest bank decided to collaborate with Microsoft and run a Blockchain-powered platform in order to make all sign-ups into the bank’s system hassle free and more secure.
In light of the recent spate of announcements, that has touched the crypto world, it is worth noting that cryptocurrencies will now be subject of taxation just as they have been the world over. With legislators currently homing in on taxing cryptocurrencies, it is not quite surprising that the Israeli Tax Authority (ISA) just announced in February it would be taxing crypto assets like regular money.
Regulators have not stopped in just imposing an overall framework for cryptocurrencies. Now, banks may be prevented from dabbling in cryptocurrencies if they are not adhering to clear-cut set of rules.
Even though the new ruling that affected Leumi Bank has set a precedent, nobody knows to what extent Israeli banks will have to state their operations more clearly when dabbling in crypto assets. If so, banks will have to make a clear statement of every transaction they carry, and likely name every individual owner.
According to some, regulation is sorely needed and it will be a great idea to push ahead with any changes that may or may not affect the future of all crypto transactions. However, regulation promises to make it so that third and ill-meaning parties would be never able to do much when it comes to tackling the defence of banks. According to Founder and CEO of Bits of Gold Yuval Roash:
Regulation is one of the things that has been important to us since the beginning. From the very beginning, we saw the problem with Bitcoin in terms of its anonymous characteristics, and we wanted to receive a currency service certificate—and we received it in August 2013.
However, the latest developments in the world of crypto currencies in Israel has allowed to probe new horizons in the landscape of blockchain in Tel Aviv. In the case of Bank Leumi, many think that the bank has actually been going against the grain of what the Bank of Israeli has been stating its objective goals, by facilitating all sorts of gambling exchanges and allowing even Uber, a blocked company in Israel to debut on the market.
Bank Leumi’s case has caused quite a bit of excitement, as marked by Yair Geva who is head of the Hi-Tech Department of Herzog, Fox & Ne’eman, an Israeli law firm:
It should be emphasized that the Court did not rule on the fundamental question—which has not yet been decided—whether Bank Leumi is entitled to refuse banking services for cryptocurrency trading. Although the final decision is still pending, it seems that this recent verdict of the Supreme Court will continue to give tailwinds to the tremendous growth of the crypto industry in Israel particularly, and to hi-tech as well as the financial industry in general. One of the reasons for this is that the Supreme Court clarified that Bits of Gold operated transparently and did not violate any statutory provision. In other words, the Supreme Court determined that currently there is no direct legal prohibition on cryptocurrency trading in Israel. It remains to be seen how regulators in Israel will respond to this landmark decision.
The progress of Israeli’s blockchain technology is undoubtedly spreading, and with its onset, it is important to know what steps to take in order to rein in the illegal appetites of third parties. It is understandable that owners of crypto assets will be on edge, but they must also find a way to curb their excitement and to overcome difficulties at ease while still pertaining to legislation, such as it is.
Cryptocurrencies are likely to change a lot in the future, and Israeli is just one of the best hotbeds to see exactly how.