Israeli banks and other financial institutions in the country must not deny banking services to companies dealing in crypto-assets, Avichai Mandelblit, Israel’s attorney general, recently stated.
Instead of denying banking services to crypto and blockchain startups, traditional financial service providers must carefully look into each case for its potential to engage in illicit activities such as money laundering, Mandelblit noted during an appearance in the Tel Aviv District Court.
Mandelblit’s view on this matter is quite different from a position taken by Israel’s reserve bank, which has been reported by local news media outlet Globes on February 19.
Last year, several major Israeli banks had suspended the accounts of users who had been receiving bank transfers that were linked to cryptocurrency transactions. This action meant several Israel-based Bitcoin (BTC) and altcoin investors had not been able pay taxes since local banks were not processing their deposits.
In August of last year, an Israeli investor had filed a lawsuit against local Bank Hapoalim for almost $23 million. The investor had alleged that the bank had refused to accept deposits which were from gains made through Bitcoin-related investments.
In other major jurisdictions like India, the country’s Internet and Mobile Association has been fighting against the nation’s central bank’s (Reserve Bank of India) prohibitions against offering financial services to companies dealing in crypto-assets.
Mandelblit’s position has been submitted via a case that involves Mercantile Discount Bank’s refusal to process transactions from local digital asset exchange BIT2C. Globes reported that the AG’s position is based on the suggestions of an inter-ministerial team managed by Erez Kaminitz, the deputy attorney general at the Civil Law Department.
This team includes several state agency members and department officials including the Israeli Ministry of Justice, the Israel Money Laundering and Terror Financing Prohibition Authority, the Israel Capital Markets, Insurance, and Savings Authority.
Although Israel’s banks have been reluctant to work with crypto firms, the nation’s government has been exploring potential use cases for blockchain, the technology that underpins most cryptocurrency platforms. The Israeli Securities Authority recently submitted an information request to determine which regulations may be hindering the growth of blockchain-focused projects and businesses in the country.