Significant steps are taken to regulate Israel's cryptocurrency market. Outgoing Capital Market Commissioner Moshe Barkat has approved a permanent license of a financial services provider for crypto broker Bits of Gold. This comes after HBH received its first license. Bits of Gold is a trading company that provides buying and selling services of virtual currencies to its customers, while HBH builds crypto trading infrastructure for banks and institutional entities. Until now, crypto companies had to operate under a temporary business permit. With the license, these companies will be able to engage with the banking and financial system more easily. So far, the banking system in Israel has opposed crypto trading on the grounds of anti-money laundering (AML) and terrorist financing risks.
Ben Samocha, co-founder and CEO of CryptoJungle, an Israeli crypto website and academy, believes this is an important development. He explained to Al-Monitor that the license is crucial because it forces banks to transfer responsibility to the new financial service providers in regard to AML and terrorist financing. "This reduces their ability to prevent Israeli citizens from being exposed to digital currencies in a simple and convenient way," he noted.
The amendment to the Bank of Israel's AML and Terrorist Financing Risk Management Directive, which calls on banks to stop rejecting cryptocurrencies outright and examine each case specifically, is expected to enter into force on Nov. 9, 2022. However, the central bank emphasizes that "the amendment does not mean that every bank must accept any action in this domain." Eli Bejerano, CEO and co-founder of Israeli cryptocurrency exchange Bit2C, thinks this measure has the potential to encourage growth since "as long as the regulator fails in creating certainty in the financial market, a negative effect is felt within the market," he told Al-Monitor.
This move is relevant to a growing number of Israelis who own or trade crypto assets. Bejerano estimated their number to range between 200,000 and 300,000.
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