• The Bank of Israel has published draft guidelines regarding cryptocurrency deposits

  • The central bank of Israel announced draft regulations that might open up the country’s financial system to crypto firms by asking banks to analyze each company individually rather than applying blanket refusals.

    According to the draft, which was posted on the bank’s official website on Thursday, banking corporations must perform risk assessments and establish policies and procedures for transactions arriving from or going into virtual currencies.

    Banks would be “forced to analyze each case on its own and will not be able to issue a sweeping denial to the service provider” for licensed crypto companies or financial asset service providers.

    Banks will also be forced to disclose the source of the funds used to purchase cryptocurrency, as well as trace the path of movement as virtual currency crosses hands “from the time of its purchase until its conversion to fiat currency and deposit into an account with the banking organization.”

    The draft is consistent with anti-money laundering (AML) regulations that went into force in November. At the time, crypto proponents in Israel said that banks had traditionally taken an ad hoc approach to taking crypto deposits, and they were hopeful that new legislation would make it easier for banks to onboard crypto consumers.

    The draft is now out for comments, and final guidelines will be developed as a result.

    To avoid the use of cryptocurrency for money laundering, regulators throughout the world are tightening AML legislation and compliance. The European Union’s legislators are seeking to ensure that its new AML authority has strong jurisdiction over virtual currencies. Earlier this year, a number of significant financial firms based in the United States, including Coinbase, Fidelity, and Robinhood, joined together to bring digital assets in line with worldwide AML regulations.

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