Digital asset service provider Bits of Gold has become the first local exchange to obtain a license from the Capital Markets Authority. The company disclosed this through its Facebook page and expressed delight at attaining the monumental feat.
The license gives Bits of Gold the leeway to offer custodial services to its users through its “Bits of Gold wallet.” Apart from catering to the needs of retail customers, the firm’s statement suggests that it is working on a service to attract banks and other financial institutions as it eyes more institutional partnerships.
The company added that securing the license puts it on the right track to attaining its objective of making digital assets accessible to the average Israeli citizen. Bits of Gold added that the provision of the service will be done “in a simple and secure manner” while maintaining full compliance with the extant regulation governing virtual currencies.
“With the receipt of the permanent license from the Insurance and Savings Capital Market Authority, we are also launching ‘Bits of Gold Wallet,'” a secure wallet that will allow customers not only to buy and sell coins but also to “store them in our secure and insured custody services and to deposit external coins.”
In mid-September, the Israeli Capital Markets Authority issued a permanent digital asset license to Hybrid Bridge Holdings, a private company in Israel. The permit given by the Authority is the “first one given to an active broker,” with experts anticipating even more licenses issued as Israel looks to stimulate its industry.
“As part of the licensing procedure, the Capital Markets Authority examines the full range of consumer risks, with an emphasis on four main risks: money laundering and terrorist financing risks, technological risks, operational risk, and safeguarding of customers assets,” stated local news outlet Globes.
The snail’s pace of institutional adoptions of digital assets in Israel
Israel lags behind in the institutional adoption of virtual currencies in the Middle East, and a series of factors are responsible for the slow pace. Israel’s taxation laws are key reasons, as the sale of digital assets attracts a capital gains tax of a staggering 33%. In business scenarios, it may be subjected to an income tax of 50%.
Tight Anti-Money Laundering (AML) regulations have seen financial institutions balking at the prospects of offering digital asset services to clients. Legal precedents have done little to sway the position of institutions in the sector, as a 2017 judgment from the Supreme Court that local commercial bank Leumi had the right to refuse service to Bits of Gold over AML conditions.
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