Thursday, November 24 2022

Israel-based crypto exchange Bits of Gold has become the country’s first crypto firm to receive a license from the Capital Markets Authority, according to the company’s social media posts on Sunday.

Following the licensing, Bits of Gold will be able to store digital currencies through secure custody in a “Bits of Gold Wallet” that they have been working on for some time. It will also start providing a service for banks and other financial institutions to connect to its digital asset services.

In a public statement, Bits of Gold said the license is the next step in its mission to make the world of digital currencies more accessible to the Israeli public “in an easy and secure way.”

Israeli authorities have imposed restrictions on cash payments in the country as they try to curb illegal activities and foster a transition to digital payments in the country.

Despite this, institutional adoption in the country has been slow, with Israeli banks having been very hostile towards crypto and blocking services until recently, citing anti-money laundering concerns (AML ).

In 2017, the Israeli Supreme Court ruled that local bank Leumi was legally entitled to deny service to Bits of Gold, with the bank claiming that the nature of Bitcoin (BTC) prevented them from following AML requirements.

The Supreme Court’s position had changed in 2019, however, when it ruled that Leumi could not block Bits of Gold’s account due to regulatory concerns, and in doing so set a precedent for other mining companies. cryptocurrency.

The enforcement of new AML regulations by the Israeli government has further paved the way for cooperation between banks and the crypto industry. The development also established a requirement that crypto companies must be licensed, although companies that applied for one received a permit to temporarily continue operations.

Related: Coinbase enters the Netherlands with central bank approval

Another barrier to institutional adoption in Israel is its tax laws. The country was recently ranked as the third worst country for crypto taxation, according to a report by crypto analytics firm Coincub on September 8.

According to Coincub, crypto sales are generally subject to capital gains tax of up to 33% in Israel and if the investment activity is considered business-related, it is subject to tax. on income up to 50%.

While the Capital Market, Insurance and Savings Authority previously granted Israel’s first crypto license to infrastructure firm Hybrid Bridge Holdings earlier this month, the license Bits of Gold received represents the first granted to an active broker.

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