Bitcoin Takes Beating in Israel
Bitcoin was dealt a major beating by the district judiciary when they ruled against Bits of Gold, a cryptocurrency broker in Tel Aviv.
Bitcoin was dealt a major beating by the district judiciary when they ruled against Bits of Gold, a cryptocurrency broker in Tel Aviv. The company had sought a court order after it was denied servicing by Bank Leumi, a local bank in the area.
The bank argued that the very nature of Bitcoin made it impossible for the bank to follow the country’s anti-money laundering (AML) requirements. Because the recipients of Bitcoin transactions cannot be identified personally, the bank is unable to determine who is receiving the transaction and is therefore unable to obey the law.
While the bank did make it clear that Bits of Gold was following the know your customer provisions of the law and was carefully reporting all transactions to the government over certain amounts, the nature of Bitcoin transfers precluded the company from obeying the AML rules.
Bits of Gold was following the letter of the law, however, the bank held the right to deny service due to the current legal ambiguity surrounding digital currencies in Israel. Without clear guidelines from the NFSA (national financial supervision authority), the bank was unable to complete its obligatory checks, and could therefore legally refuse service.