Israel has taken a step forward in cryptocurrency regulation with the country’s finance ministry publishing draft legislation concerning money laundering via cryptocurrency, according to local news source Globes. The draft was signed by finance minister Moshe Kahlon.
On June 1, a new law covering financial service providers will come into effect. It will include a provision for digital asset providers for the first time. The draft notice is an addition to this new law.
The draft notice explains: “The definition of a service in connection with financial assets is being expanded beyond currency services, to includes all activities and services performed by a business in connection with financial assets that does not include credit.”
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“Among the financial assets added to the definition is a virtual currency, with the intention of allowing supervision of financial services other than tangible assets or standard financial means, in a field that has been developing in recent years.”
The cryptocurrency community has received this news with optimism, according to the report. Manny Rosenfield, head of the Israeli Bitcoin Association, said: “On many of the occasions in which banks have refused to accept money that originated with cryptocurrency, we met with the statement that the field is not regulated. The new order will regulatory certainty for those involved in the field, and will define rules that are permitted and forbidden, which will enable banks and financial institutions to know who is compliant with the law, and whose money they can safely receive. The union gave a proposal on the subject to the Israel Anti-Money Laundering Authority several weeks ago, and we welcome the regulator’s quick action to allow those involved in the field to operate.”
There have been many cases of Israeli banks refusing to accept cryptocurrency-related money, and on two occasions recently those banks were forced to accept the money after being taken to court.
A company that won a similar case in February of this year is called Bits of Gold. This company’s risk manager, Yael Naaman, commented on the draft law: “The Israel Anti-Money Laundering Authority has acted quickly and we hope that its move will bring order to the market. However, unfortunately, the authority chose not to specify that remote user identification technologies, including biometric face recognition technology, could be used to identify suspicious operations. This would enable the identification of a customer without requiring physical access. We call on the authority to add this to the final order.”