Israel’s Attorney General refutes court’s blanket ban on crypto related transactions in banks and financial institutions. The AG disagrees with the two-year long blanket ban on banks dealing with crypto payments stating that “each case should be handled individually to check for any case of money laundering.”
In a new development reported by Globes earlier on Wednesday, the Israeli Attorney General, Dr. Abihai Mandelblit, stated that Israeli banks cannot legally impose a blanket ban on all crypto related transactions given not all transactions are cases of money laundering.
Abihai said it is the banks responsibility to check of any money laundering risks on each individual transaction instead of placing an industry wide ban on any crypto activity.
In a statement in a Tel Aviv District court, the AG switched from the long standing position of banks not working with any crypto related payment service on the grounds of m oney laundering risks. The issue arose during the hearing of Mercantile Discount Bank’s dispute with BIT2C as the bank refused to process a payment to an account holder stating the account was involved in Bitcoin trading.
It has been a long standing debate on how cryptocurrencies and other virtual currencies are regulated in Israel with the latest statements by the AG aiming to bring clarity and stability in the digital assets field. Despite contradicting the guidelines offered by the Bank of Israel on banks dealing with cryptocurrencies, the AG believes digital assets offers advantages that may be erased with a blanket ban on the industry’s connection with the banking system.
Crypto regulation in Israel
In 2018, Israel proposed new laws to govern the cryptocurrency industry in the country. However, regulation around this area remains largely untested and vague with the lawmakers making it more confusing to transact digital assets in its jurisdiction.
This could be due to the risks that cryptos such as Bitcoin pose to the industry including money laundering, and scams promoted in the field. In August last year, Israeli and European authorities followed up on a $6 million scam involving BTC which led to stricter laws across banks, who refuse to process deposits to cryptocurrency exchanges in the country.