The cryptocurrency exchange Israel-based Bits of Gold has become the country’s first cryptocurrency company to receive a license from the Capital Markets Authority.according to the company’s social media posts on September 18.
As a result of obtaining the license, 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 offering a service that allows 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 a simple and secure way.”.
Israeli authorities have been placing restrictions on cash payments in the country as it tries to combat illegal activity and push for a transition to digital payments within the country..
Nonetheless, Institutional adoption in the country has been slow, as Israeli banks have been very unfriendly to cryptocurrencies and have blocked services until recently, citing Anti-Money Laundering (AML) issues..
In 2017, the Israeli Supreme Court ruled that local bank Leumi was legally allowed to deny service to Bits of Gold.and the bank claimed that the nature of bitcoin made it impossible for them to follow ALM requirements.
Nevertheless, the position of the Supreme Court had changed in 2019, when it ruled that Leumi could not block the Bits of Gold account based on regulatory concerns, and in doing so set a precedent for other crypto companies.
The implementation of new AML regulations by the government in Israel further opened the way for cooperation between banks and the cryptocurrency industry. The development also established the requirement that cryptocurrency companies must have a licensealthough companies that applied for one received a permit to temporarily continue operations.
Another barrier to institutional adoption in Israel is its tax laws. The country was recently ranked as the third worst country for crypto taxationaccording to a report published by crypto analytics firm Coincub on Sept. 8.
According to Coincub, cryptocurrency 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 income tax of up to 50%.
Although the Savings, Insurance and Capital Markets Authority had already granted the first Israeli cryptocurrency license to infrastructure company Hybrid Bridge Holdings earlier this month, the license that Bits of Gold has received represents the first one granted to an active broker.
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