As has been widely reported, the Israeli Tax Authority has conducted an audit at the offices of Bits of Gold, a Bitcoin and Ethereum exchange. Bits of Gold also transacts in alt coins in an OTC fashion. The Israeli Ministry of Finance gave Bits of Gold a temporary Financial Services Provider license in May of this year. This license is expected to become permanent later in the year.
Bits of Gold will now provide trading information on customers that transfer $50,000 or more a year. The company must pass on the information about customers to the Money Laundering Authority but not to the Tax Authority. Bits of Gold is one of the largest companies in cryptocurrency trading sector in Israel and has more than 50,000 registered customers. The Tax Authority is expected to approach other companies in order to reach similar agreements.
Dr. Asher Holzer, Chairman of HeartChain, a blockchain-based platform for medical innovations development funding, commented on the government action describing the move by the tax authority as acknowledging that cryptocurrencies have become a matter of “public and economic importance.”
“Unlike those who criticize the move, those who work in an orderly fashion, wish for the day the Tax Authority and other regulatory bodies will intervene and put the Crypto field in order. The Crypto field receives tremendous interest in Israel, and one of the main obstacles to regulate it, as regularly arises, is the issue of money laundering detection.”
Holzer says that transparency and making sure that tax is being paid will help to establish the crypto-currency business as the mainstream modality and an integral part of the payment system.
“I am hopeful that such measures are meant to promote the Crypto regulation, rather than to burden the activity.”
Holzer states that the Tax Authority does not have a legal ground to require companies like Bits of Gold to provide information about their customers. But these companies have a good reason to cooperate with the Tax Authority and pass on the information. This comes down to industry legitimacy.