Client updates /  Digital Currencies

The Bank of Israel is proposing to regulate the provision of services to licensed cryptocurrency service-providers so that banks will not be able to sweepingly refuse to provide service and will have to formulate a risk management policy.

Prompted by the use of digital currencies to fund terror and other illegal activity, the Israel Money Laundering and Terror Financing Prohibition Authority has published a document aimed at assisting financial bodies and law enforcement agencies to identify improper activity in this field.

Regulatory resistance and legal proceedings by the US Securities and Exchange Commission are hindering the realization of one of the greatest promises of blockchain technology – the transfer of cryptographic currencies and assets between users without an intermediary.

After a long wait, the US Securities and Exchange Commission (SEC) has permitted a startup company to raise funds from the general public through a supervised security token offering (STO) under Reg A+ regulations. Effectively, this is the first time a public STO was granted regulatory approval in the United States.

The Tel Aviv District Court issued a ruling recently on a case concerning a bank’s conduct with funds whose source is digital currencies. The court expressly ruled that the bank’s blanket ban on the opening of bank accounts by clients engaging in digital currency activity is unreasonable.

This month, an Israeli district court deliberated a motion for an interlocutory order against Bank Hapoalim. The order would obligate the bank to accept the transfer into a customer’s account of money that constituted proceeds from a sale of digital coins transacted outside of Israel.

Precedent set by the Tel-Aviv District Court rules that a bank may refuse to provide service to a company engaging in virtual currencies.