Cryptocurrency Draft Law in Israel. Israeli Firms to Report on Clients’ Crypto Activities

Cryptocurrency Draft Law in Israel will come to force on June,1. A new legislation draft by Moshe Kahlon sets out large sums transferred to cryptocurrency wallets, money transfers made using an anonymous IP and transfers to online gambling sites.

Israeli Ministry of Finance Publishes Draft Money Laundering Regulations

As of June 1, the first law regulating the activity of financial service providers and defining measures in anti-money-laundering via cryptocurrency will come into force in Israel, reports Finance Magnates.
According to the draft law signed by the country’s finance minister Moshe Kahlon, now all digital currencies are related to financial assets.
In addition, from the moment the law enters into force, brokers, banks, crypto-exchange exchanges and all operators that provide access to digital assets will be required to comply with AML / KYC standards. In particular, they will have to report suspicious cryptocurrency transactions of their customers, including using Monero and Zcash.
It is also noted that service providers and companies should maintain such information for at least 5 years. Thus, information about IP addresses, cryptocurrency wallets and the cryptocurrencies will be stored.

The cryptocurrency community accepted this cryptocurrency draft law in Israel with optimism. Manny Rosenfield, head of the Israeli Bitcoin Association, commented:
“On many of the occasions in which banks have refused to accept money that originated with cryptocurrency, we met with the statement that the field is not regulated. The new order will regulatory certainty for those involved in the field, and will define rules that are permitted and forbidden, which will enable banks and financial institutions to know who is compliant with the law, and whose money they can safely receive. The union gave a proposal on the subject to the Israel Anti-Money Laundering Authority several weeks ago, and we welcome the regulator’s quick action to allow those involved in the field to operate.”

Previous Regulations

We recall that in February 2018 The Israeli Tax Authority equated the cryptocurrencies to financial assets. In March Israel Securities Authority (ISA) Committee for the Examination and Regulation of Initial Coin Offerings (ICOs) refused to recognize bitcoin as a security.
Earlier many Israeli banks refused to accept money received from cryptocurrency operations in view of the lack of relevant legislation but were forced to accept the money after being taken to court. Israeli cryptocurrency exchange Bits of Gold won a case in February. The Israeli Supreme Court banned Leumi Bank from blocking activity on the accounts of the local cryptocurrency exchange.

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