The central bank of Israel announced draft regulations that could allow crypto businesses to operate in the country’s financial system by requiring banks to examine each company individually rather than imposing blanket bans.
Banks will no longer be able to refuse crypto deposits
According to the draft published on the bank’s official website on Thursday, banking firms must carry out a risk assessment and establish policies and procedures for transactions originating in or destined for virtual currencies. For licensed crypto companies or financial asset service providers, banks would be “forced to analyse each case on its own and will not be able to issue a sweeping denial to the service provider.”
Banks will also be required to disclose the source of the funds used to purchase cryptocurrency and also track the path of movement as virtual currency passes hands “from the time of its purchase until its conversion to fiat currency and deposit into an account with the banking corporation.” The proposal is now open for comments, and final guidelines will be developed as a result.
The draft aligns with recent anti-money laundering regulations
The draft is in accordance with the anti-money laundering (AML) regulations that had been introduced in November. These rules were already designed to make it easier for local banks to accept crypto sector clients. At the time, these regulations were a collaborative effort between the country’s Capital Market, Insurance and Savings Authority, and the Ministry of Justice.
Not only Israel is working on crypto regulations. Regulators around the world are tightening AML regulations and compliance to prevent the use of cryptocurrency for money laundering. European countries are also working to ensure strict oversight of virtual currencies, and earlier this year, a group of influential financial firms based in the United States, including Coinbase, Fidelity, and Robinhood, joined forces to bring digital assets into compliance with global AML rules.