Upon appeal, the Israeli Supreme Court has rejected the closure of Bits of Gold’s banking facilities at Leumi bank, Tel Aviv. The Israeli cryptocurrency brokerage’s appeal followed a previous ruling against it that has now been set aside by the higher court.
As Israel and many other countries struggle with the accelerated phenomenon of virtual currencies, Leumi Bank recently made the news for being a particularly blunt rejector of Bitcoin. There is widespread anticipation that the upcoming G20 Summit in March 2018 will produce a global, moderate framework for a regulatory approach. Set against that are persistent hostile stances the world over from banks, asset managers and even governments towards cryptocurrencies.
Don’t Break Out the Champagne Yet
A startup circa 2013, Bits of Gold has fought a David and Goliath battle since their banker decided it wanted to steer clear of all cryptocurrency-related business.
On record as recently telling another bitcoin-related trader that they simply don’t want the business, Leumi Bank’s hard-line stance is accumulating bad press. The second-largest bank in Israel appears as discriminatory when analyzing virtual currency traders and other digital coin businesses. During 2017, a customer made a bank transfer to the Kraken exchange site for buying bitcoin worth $1000. The bank identified the request, halted it, and started investigating.
The elated CEO of Bits of Gold, Youval Rouach said that “The court’s decision enables us to focus on the growth of the Israeli cryptocurrency community.”
Noting that his company “[Was] the first to request the creation of rules for digital currency trade and the first to comply with those rules and others,” he committed the company to continuing to:
“…lead this field in order to give cryptocurrencies their rightful place – as a massive growth engine for the Israeli high tech and fintech industry.”
The February 26 Supreme Court ruling granted Bits of Gold a temporary injunction against their account closure pending further scrutiny by the bank and other parties. The presiding bench declared that the company had “acted transparently and did not violate any provision of law.”
Calling the bank’s concerns “speculative” and turning an unsympathetic ear to the plaintiff, the ruling does, however, allow for the bank to still close the account on any small technical detail that defies legislation. As a record of a public spat around cryptocurrency’s right to be recognized in many ways, the ruling is seen as a victory for the local cryptocurrency community.
One Small Step Forward
Although not as absolute as nations like China that has opted for draconian bans, Israel is a front line for digital coins’ right not just to exist, but also become assets in the true sense of the word. The Supreme Court noted in its written ruling that Bits of Gold had not made itself guilty of the violation of any standing laws since opening its doors for business.
Apart from the Israeli revenue service opting to tax cryptocurrency assets as “properties” and other more positive developments dating back to mid-2017, Israel remains a strange mix of genteel acceptance alongside wildly opposing voices.
The Bits of Gold v. Leumi Bank case might become something of a test case once the bank applies its mind in scrutinizing the company’s accounts against the backdrop of existing legislation. The outcome will also be informed by sentiment post the G20 Summit due in March as well as other global regulatory trends.