Banks Forced by Central Bank of Israel to Accept Crypto Profits

• Domestic banks in Israel were informed by the Central Bank of Israel that the profits generated by acts associated with cryptocurrencies must not be refused.
• A draft circular was dispersed by the Central Bank of Israel to all domestic banks in addition to Proper Banking Procedure 411.
• An announcement was made by the Israeli regulators that fresh regulations will be imposed by them on the crypto sector.

The Central Bank of Israel has dispersed the instructions to domestic banks that they will not refuse the profits generated by the cryptocurrencies, as long as the profit generated is sourced from a genuine source and not from any illicit source. The intention of this process is to complement the Money Laundering Prohibition Ordinance, which applies to bodies related to cryptocurrencies and their functions.

Banks in Israel will Accept Crypto Profits

As per a domestic report, the Israeli Central Bank gave out a draft circular to the domestic banks operating in the nation with Proper Banking Procedure 411 in addition. The significant concentration of the document is towards money laundering as well as other monetary crimes.

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The directive is targeting the up-gradation of laws foisted on the cryptocurrency bodies, eventually managing the risks associated with the transfer of cryptocurrencies. The announcement clearly indicates a straightforward instruction by the Israeli Central Bank that the profits from the crypto-assets should not be refused by the domestic banks operating in the country.

However, the circular contains some details that should be kept in mind by the bank while they process a transaction associated with cryptocurrency. This involves the classification of risks, settlement size, and initial funds’ nature.

Talking about some barriers that may be visible, Bit2C’s Ron Tzafrati stated, “On the one hand, the Bank of Israel finally recognizes the obligation of banks to perform a risk assessment and management and not to refuse in a sweeping manner the transfer of funds by the Bank’s customers in connection with digital currency activities. On the other hand, the bank leaves broad discretion to banks to continue to refuse in many cases, which do not really create a real risk of money laundering.”

The Israeli regulators made an announcement about a month ago that fresh rules will be enacted on the crypto market, reducing the unethical utilization of digital assets.

A Citizen’s Struggle

In accordance with the new law that enables the banks to accept profitability generated via digital assets, the case of an Israeli citizen is worth mentioning.

A retired Israeli Citizen invested $3,240 in Bitcoin, which eventually increased by 1000% due to the asset’s initial growth. But the nation’s leading bank, Bank Hapoalim refused to accept her deposit of $324,000 transferred from a platform the individual utilized as the initial deposit many years ago was done via cash. As per the bank, the money might have some roots going towards terrorist funding or laundering of money.

An attorney was hired by the citizen, and a lawsuit was filed against the bank for obtaining the funds. Ultimately, the court ruled that the bank should not prohibit the deposits of their clients just because they are associated with the crypto assets. The Bank promised to see the details and then reply in an accustomed way.