Bitcoin, and other cryptocurrencies, have recently become the hottest topic in the global economy. But unlike a growing number of countries that allow more or less free trade in cryptocurrencies, and depositing profits from them in the banking systems, in Israel this revolution is delayed.
The delay, it seems, stems more from the banks’ fears of being exposed to money laundering activities – than from halting the regulatory bodies in Israel. It is precisely in Israel that the absurd situation has arisen, in which the courts, the Attorney General and even the Tax Authority allow more and more relief in depositing profits received from trading in decentralized currencies, while the banks themselves have until recently stood as a wall against depositing such funds in their accounts.
Recently, the digital bank Pepper, which is owned by Bank Leumi, issued a statement to the media, according to which it will be the first Israeli bank to allow trading in cryptocurrencies. The declaration has received, not in vain, much resonance, but if you bother and examine it closely, the promised revolution is revealed as a great commotion for nothing.
Anyone who goes down to the details will find that Pepper is actually setting up a closed garden, a kind of internal exchange, which will allow bank account holders to purchase and trade cryptocurrencies.
Does this mean that Pepper will now allow Israeli investors to deposit the crypto profits they have accumulated over the years in their accounts? no and no. Pepper’s closed garden can only be entered for the purpose of purchasing and trading internal cryptocurrencies. It will be possible to sell and buy different digital currencies, and convert them into other currencies – as in any other crypto exchange, but unlike those exchanges, it will not be possible to put crypto coins in external cryptocurrencies in your wallet.
Unlike securities trading platforms, Pepper users will not be forced to sell the virtual currencies they purchased at the bank before going out. They will certainly be able to purchase, for example, Itrium or Bitcoin in Pepper, and then pull them out for trading or investing in the real world. But it is important to note that then of course, the way back of those funds to the Pepper account will be blocked, similar to the external crypto profits of any other Israeli investor.
Despite the other Israeli backlog occurring in the world, one can more and more notice the recent easing of the regulator, the tax authority and the banks regarding the deposit of crypto profits in the Israeli banking system.
A huge deposit of about $ 2.8 million of crypto profits was recently reported in the media, in the account of a Bank Hapoalim customer. This deposit, which I borrowed closely, is perhaps the first swallow of the real and obvious revolution – in which Israeli crypto investors will be welcomed by the state with open arms, and will not feel persecuted by their decision to transfer part of their capital to decentralized money.
It must be said that even today, such a deposit of crypto profits in bank accounts in Israel, obliges depositors to pay the full tax on their profits to the tax authority before the funds are deposited in their bank account. In addition, those depositors must go through not-so-simple butts, in order to prove that the funds they wish to deposit were obtained from identifiable and legitimate sources, and are not a product of money laundering. Unfortunately, those who are interested in making such a deposit, must seek the help of experts in the field, because this minefield is difficult to impossible to cross today alone.
If until this year it could be said that the policy in Israel is to scare crypto investors, and dissuade them from turning their fiat money into decentralized currencies, it seems that the financial system has recovered, or can no longer withstand the onslaught, and decided to join the celebration.
If we continue with the same metaphor, we can say that in Israel you can already hear the bass beats, but the road to the real party of the crypto is still in its infancy. The longer the crypto revolution is delayed, the more thousands of Israelis will find themselves enjoying fruits in foreign fields, while the tax authorities in Israel lose billions of shekels a year.
It is important to understand that these tax money, which many Israelis long for to pay, but which was avoided due to the much bureaucracy involved in the process, could easily have filled the Ministry of Finance’s empty coffers. All it takes is a little vision, determination and simple and advanced regulation.
The author is the (co-chair) of the Central District Crypto and Coins Committee of the Bar Association