The popularity of the Bitcoin is worrying banks and regulators around the world. Since the Bitcoin are an unofficial and unregulated currency, banks and the authorities do not know how to deal with them, or whether to allow their customers to trade in them.
Banks and regulators around the world are most worried about money laundering via Bitcoins. Regulators require banks to monitor transactions by their customers and to report suspected cases of money laundering, but in the case of the Bitcoin, there is no record of the source of the money or where it is going, making them very convenient for money laundering and other misuses of the currency.
Israel has not yet established guidelines for working with Bitcoins. However, it was reported a few weeks ago that the Israel Tax Authority was considering taxing profits on trading in the virtual currency. Israeli banks are also deliberating how to deal with the Bitcoin, and most banks ban their customers from trading in them, prompting quite a few complaints from customers.
The banks have therefore asked for clear guidelines on Bitcoins from the regulator. The Association of Banks in Israel has asked Supervisor of Banks David Zaken for guidelines. "Transactions in Bitcoins are taking off, and it is now a means of payment by a range of businesses, both virtual and brick-and-mortar, in Israel and around the world. Nonetheless, Bitcoin activity is not regulated by any authority, and no rules have been established for it, even though it is liable to expose users to various risks," states Association in its letter.
"When banks' customers use the Bitcoin, money is transferred to and from a customer's account anonymously, via e-commerce sites, without knowing who is on the other side. For this reason, the banks cannot monitor the essence of the activity in the customer's account. In addition, the banks cannot know whether the funding of terrorism, money laundering, or other illegal activity is involved."
Published by Globes [online], Israel business news - www.globes-online.com - on December 3, 2013
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