Israeli Supreme Court Prohibits Banks From Restricting Crypto Activity In Landmark Decision

Israel’s Supreme Court has issued a temporary court order prohibiting Leumi Bank from restricting the banking activity of crypto broker Bits of Gold, Finance Magnates reported yesterday, Feb. 26.

The Supreme Court’s decision, that has been described as “precedent-setting,” means that banks in general cannot limit accounts associated with the crypto industry.

In June 2017, the district judiciary court in Tel Aviv had supported Leumi Bank when Bits of Gold had sought a court order after being denied service by Leumi. The bank had cited an inability for Bitcoin (BTC) transactions to follow Israel’s anti-money laundering laws as the reason for service denial.

In December of last year, Leumi Bank also began blocking customer payments to BTC exchanges, citing the Israeli law against gambling and instructions from the Bank of Israel as the cause for stopping these payments to “websites that execute gambling transactions.”

After the Feb. 26 Supreme Court decision, this time favorable to Bits of Gold, local news outlet the Globe reported yesterday that Yuval Roash, the CEO of Bits of Gold, said in a statement:

“The court’s decision enables us to continue to focus on the base of the crypto community in Israel. We were the first to request the creation of rules for the activity of digital currencies and the first to stand by those rules.”

The Judge Anat Baron, who ruled on the case, said since the bank’s decision to terminate Bits of Gold’s account was based on an assumption that violations of the law would take place, the lack of any violations over the past five years supports the decision of undoing those restrictions.

However, Baron adds that the court order is “not intended to harm the bank’s rights to analyze with specificity every transaction that takes place with the bank account or to take any actions that are related to minimizing risks, which become transparent through the activities of the company.”

The law firm that represented Bits of Gold, Zioni Pillersdorf Philip, said that they are:

“Very pleased with the courageous decision of the Supreme Court. This is a precedent-setting decision whose importance can not be overstated in relation to the trading of digital currencies.”

Israel has been coming up with guidelines for cryptocurrency regulation in the country in bits and pieces. Israel’s tax authority reported last week that it would consider cryptocurrencies as property in terms of taxes, and in August 2017, the Israeli Securities Authority panel announced that they would potentially begin regulating Initial Coin Offerings (ICOs).

Also in December of last year, the Israeli government said that they are considering releasing their own national currency tied to the shekel in an effort to limit black market transactions.