Israel-based crypto exchange Bits of Gold became the first crypto company in the country to receive a license from the Capital Markets Authority on September 18, according to company social media posts.
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 will allow 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 their mission to make the world of digital currencies more accessible to the Israeli public “in a simple and secure way”.
Authorities in Israel have imposed restrictions on cash payments in the country as it tries to fight illegal activities and bring about a transition to digital payments in the country.
Despite this, institutional adoption in the country has been slow, with Israeli banks until recently very unfriendly towards crypto and blocking services, citing money laundering (AML) issues.
In 2017, Israel’s Supreme Court ruled that local bank could legally refuse Leumi service to Bits of Gold, alleging that the nature of Bitcoin made it impossible for them to meet ALM requirements.
However, the Supreme Court’s stance changed in 2019, when it ruled that Leumi could not block Bits of Gold’s account over regulatory concerns, setting a precedent for other cryptocurrency companies.
The enforcement of new AML regulations by the government in Israel further opened the way for cooperation between banks and the crypto industry. The development also required crypto companies to be licensed, although companies that applied for one were granted a license to temporarily continue their operations.
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Another barrier to institutional adoption in Israel is the tax laws. The country was recently ranked as the third worst country for crypto taxation according to a report released on September 8 by crypto analytics firm Coincub.
According to Coincub, the sale of crypto is generally subject to a 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%.
While the Capital Market, Insurance and Savings Authority had already granted the first Israeli crypto license to infrastructure firm Hybrid Bridge Holdings earlier this month, the license Bits of Gold received is the first to be given to an active broker.