The Israeli Supreme Court reached a decision today in the crypto space, requiring banks to allow trading, and prohibiting them from limiting the bank accounts of companies associated with the industry.
The Supreme court issued a temporary court order to prohibit Israel’s Leumi Bank from limiting in any capacity the bank account of Israeli crypto company Bits of Gold, which acts as a broker (exchange) in facilitating the buying and selling of digital assets.
As exclusively reported by Finance Magnates at the time, Leumi Bank made a decision in December of last year that was heavily scrutinized by crypto enthusiasts. The bank decided to block payments to Bitcoin exchanges in the midst of surging demand for the digital asset. Bank Leumi had claimed that the decision was in line with an order issued by the Bank of Israel.
However, it appears that the order was actually part of regulatory confinements put in place for the online gambling industry. The bank further classified various Bitcoin exchanges as gambling sites, thereby permitting it to block such payments to the exchanges.
Reactions to the Court’s Ruling
According to Globes Financial publication, CEO of Bits of Gold, Yuval Roash issued a statement in response to the Supreme Court’s decision. “The court’s decision enables us to continue to focus on the base of the crypto community in Israel. We were the first to request the creation of rules for the activity of digital currencies and the first to stand by those rules. We will continue to lead the industry, in order to give digital currencies their rightful place in the Israeli economy, as an incredible growth engine for the high tech and financial industries.”
Supreme Court Judge Anat Baron commented on the court’s decision: “This court order is not intended to harm the bank’s rights to analyze with specificity every transaction that takes place with the bank account or to take any actions that are related to minimizing risks, which become transparent through the activities of the company.”
Victory for Crypto
Today’s decision by the Israeli Supreme Court overrides the bank’s decision, marking a major victory for the cryptocurrency community.
There is however a major asterisk attached to this crypto “victory.” While the Supreme Court’s decision does prohibit Leumi Bank from blocking any transactions or activity of the Bits of Gold company bank account, banks are still able to circumvent the ruling by applying restrictions on the accounts of individuals attempting to make transactions through the company. Therefore, it is still far from a sweeping win for the cryptocurrency industry in Israel.
Israel’s Tax Authority recently published laws pertaining to blockchain companies and cryptocurrency exchanges. The laws provide an outline for the payment of taxes on profits yielded from investing in virtual currencies. It is clear that in the event that trading on cryptocurrencies continue, there is a great deal that can be earned by the government by not banning or limiting the industry.
Today’s ruling in favor of the crypto space is far different than the situation of Binary Options, in which the Israel Securities Authority issued a comprehensive ban of the industry.
Don’t Count the Chickens
While it is important to acknowledge the positive results reached today for all cryptocurrency supporters in Israel, it also should be taken with a grain of salt. The situation is fluid, and the court order is temporary, meaning that it is possible that upon further information and evidence, the order could be reversed.
Additionally, as long as banks can still hinder transactions and other activity on the part of individual users, they can still impact the market substantially and obscure enough transactions to cap the market’s expansion.