While Israel’s banks are in no hurry to accept the blockchain industry and are avidly trying to keep their distance from cryptocurrencies, this is not the case elsewhere.
Recently, the major global securities, derivatives and financial trade associations sent a joint letter to the Bank for International Settlements (BIS), which develops banking supervision standards and criteria, to adopt regulation that will enable their involvement in the crypto asset sector.
Among the associations that applied to the BIS are the Global Financial Markets Association, the Financial Services Forum, the Futures Industry Association, the Institute of International Finance, the International Swaps and Derivatives Association, and the Chamber of Digital Commerce.
The 64-page document signed by these associations¹ contains an appeal to the BIS not to be overly stringent about the framework for bank involvement in the crypto asset sector. The associations further argue that the BIS should encourage financial institutions’ involvement in the crypto asset sector so that benefits of this new technology can be fully realized and advance the global economy.
The organizations state in their feedback: “A framework that is overly conservative will have the effect of precluding regulated bank involvement in crypto asset markets”.” The organizations expressed support for regulation of the market, albeit with a balanced approach that facilitates their active involvement.
The blockchain industry in Israel
Blockchain companies are having a hard time working opposite the banking system in Israel. For the most part, Israeli banks are refusing to transfer funds for the purpose of purchasing virtual currencies and are even refusing to accept deposits of funds originating from cryptocurrency trading.
This policy is pushing Israeli companies, including promising blockchain technology companies, to establish or relocate their operations overseas.
Notwithstanding Israel’s stalling, an amendment to the Prohibition of Money Laundering Order is expected to come into effect in November 2021. This amendment will make it more difficult, at least theoretically, for banks to refuse to accept and deposit funds originating from cryptocurrencies.