Most investors in digital assets are happy to pay taxes, but those in Israel are finding it a lot more difficult to do so, as investors in Israel are reporting that banks are unwilling to allow them to deposit their funds into their bank accounts, making it so they are unable to pay the taxes on these investments.
The problem appears simple on its surface but is actually quite complicated. Banks are concerned about investors acquiring these funds through illegal or fraudulent means, such as money laundering, and are unwilling to accept the funds as a result. Even when depositors have been able to properly verify that everything they have been doing has been done legally, there are those financial institutions that are still unwilling to accept the funds.
With banks being unwilling to accept these assets, it is leaving investors unable to pay their taxes. As a result, the tax authority in Israel has been imposing liens on investors in an attempt to retrieve the taxes they are owed. This is putting investors in a very difficult situation, as they are trying to do the right thing, but are being blocked by their financial institution.
Investors have notified the tax authority of their problems, and the government agency recognizes the issue. In some instances, they have even removed liens, but that has not removed the problem. The investors still can’t deposit their assets and there appears to be no solution to remedy the problem.
The issue is that these banks are unwilling to accept these recognized currencies out of fear that government regulators will determine the funds were acquired illegally and take action against the bank. This comes on the heels of a Supreme Court decision in January which barred the Leumi Bank from blocking a local cryptocurrency exchange from doing business there out of these types of concerns.
Despite this, the problem still persists. Now the problem has escalated as many are finding it impossible to transfer their funds to their bank account to be able to pay taxes. It is a vicious circle for investors, who may have no remedy whatsoever beyond looking for banks outside of the country who are willing to accept their funds.
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