Bits of Gold cryptocurrency exchange has become the first crypto company in Israel to receive permission to work with local banks. As a result of obtaining a license, Bits of Gold will be able to store digital currencies through a security deposit in the “Bits of Gold Wallet”, which they have been working on for some time. It will also launch a service allowing banks and other financial institutions to connect to the company’s digital asset services.
Bits of Gold said that the license is the next step in their mission. Make the world of digital currencies more accessible to the people of Israel simply and securely. The Israeli authorities are restricting cash payments in the country to stop illegal activities, and for the same reason, they are encouraging the transition to digital payments within the country.
However, institutional adoptions in Israel have been slow as local banks have, until recently, been very unfriendly to cryptocurrencies and have blocked services citing money laundering (AML) issues. In 2017, the Israeli Supreme Court ruled that local bank Leumi could legally refuse service to Bits of Gold because the financial institution argued that the nature of Bitcoin prevented them from complying with the ALM.
However, the position of the Supreme Court changed in 2019 when it ruled that Leumi could not block the Bits of the Gold account, citing regulatory requirements, setting a precedent for other crypto companies. The Israeli government has further expanded the opportunities for cooperation between banks and the crypto industry. They also required crypto companies to obtain a license to operate. In the meantime, companies that applied were granted permission to temporarily continue their operations.
Another barrier to institutional implementation in Israel is the tax laws. According to a report released on Sept. 8 by analytics firm Coincub, the country recently ranked third in the world for taxing cryptocurrencies. According to Coincub, the sale of cryptocurrencies in Israel is generally subject to capital gains tax of up to 33 percent, and if the investment activity is considered a commercial activity, it can be subject to income tax of up to 50 percent.
While the Capital Markets, Insurance, and Savings Authority earlier this month had already granted Israel’s first cryptocurrency license to an infrastructure company called Hybrid Bridge Holdings, the license obtained by Bits of Gold is Cointelegraph reports the first to be granted, active broker.
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