Israel Banks Limiting Bitcoin Buying – Waiting for Regulatory Decisions

According to Israeli Army News (English translation below), Israeli banks have begun to limit the size of wire transfer amounts to bitcoin exchanges. The article explains that due to concerns of money laundering, taxation, and legality, banks have asked the Bank of Israel and Finance Ministry to provide an answer as to whether there are any regulatory problems with money transfers being made for bitcoins. So far, the regulators have yet to provide any guidelines and have said that they are investigating the matter. (With forex regulation in Israel being a slow process, it will interesting to see if bitcoin laws get finalized first)

In the time being, without an answer from governing bodies, Israel banks are limiting the value amount of international transfers allowed to be sent to bitcoin exchanges; specifically to Japan, home of MtGox and the most bitcoin/money exchanging in the world.

What hasn’t been done yet is a complete ban on bank transfers to bitcoin exchanges around the world, and Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term sent to non-Japanese venues have been executed according to Forex Magnate’s internal investigations. Also, while local Israeli bitcoin dealers are known to be out of bitcoins due to the limits on international transfers, they are theoretically still in business (just without stock) and haven’t been approached by regulators. Nonetheless, the events represent that although it is easy to transfer bitcoins around the world, hurdles remain for buyers to actually purchase the currency. While Israel‘s effect on bitcoin demand is probably quite low, if similar measures occur from larger nations it could very quickly sap demand.

On a silver lining, the fact that banks are approaching regulators for a decision means that rules from governments around the world should be forthcoming. As such, if there are provisions that deal with money laundering and legality, it could lead to easier outflows to bitcoin exchanges which would make the currency more readily available. On the other hand, they may just ban them outright due to client safety and money laundering issues.

English Translation of the Hebrew article

Bitcoin is a virtual currency created four years ago by Natoshi Nakmto – he hasn’t been indentified, but is probably is a decent person. There is no central bank that controls the currency and its conversion to dollar’s is primarily carried out mainly in Japan. In recent months its value has risen mainly due to the crisis in Cyprus. But, there is one problem; it is not really a coin, and it’s not a security or commodity, but result of a mathematical calculation. Authorities/regulators around the world are dealing with this problem, and now they are in Israel. Gil Assayag is involved with the Israeli bitcoin market and is helping his girlfriend to acquire bitcoins. But, to all the exchanges he has contacted (there are around ten exchanges in Israel and thousands who hold bitcoins) he has heard that there are problems with Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term. "I tried to help a friend buy Bitcoins, we went through the entire list of money changers that I know, and they are all suffering from the same liquidity problem. Probably for the same reasons.” , Explained Assayag. Banks have slowly begun to discover this new field of activity. They aren’t familiar with the product and therefore prohibited the transfer of dollars to Japan from local bitcoin money changers, as in Japan the bulk of conversions are executed. Also Manny Rosenfeld, who provides bitcoin services has experienced limits from banks “In the beginning of the 2013, demand increased a lot, and the activity in my bank account also rose. They decided that the activities weren’t very clear, and there could be problems of regulations. Therefore, they limited the amount that I could transfer out of Israel every month” said Rosenfeld. Bank of Israel and Finance Ministry “The topic is being investigated” Banks don’t know how to deal with this entity. Is it taxable? Is it legal, and there are no money laundering issues? Therefore, some of them contacted the Bank of Israel to get answers. The Bank of Israel answered that they couldn’t give any guidance and that they are learning about the topic, and that bitcoins aren’t classified as a currency. In regard to money laundering, the Finance Ministry was contacted and they answered that “the topic is being investigated.” According to Gil, no one is providing answers to bitcoin traders “The regulator needs to decide one way or the other. They need to tell banks ‘these transactions are permitted’ or ‘these transactions are forbidden’, but at this point the situation is like a jungle on this point.” There is no supervisory group for bitcoins, and there is a big concern of a bubble taking place; just yesterday the value of the currency fell to $100 and then returned to around $200. Therefore, it is reasonable that the concerns of the banks is justified, but they expect guidelines. At First International Bank of Israel, they admitted that they limit the activity of bitcoin traders. At Bank Hapoalim they said that the product has no legal validity and therefore they don’t see possibilities to execute transactions with it.