Israel banks ‘cannot refuse’ crypto companies: attorney general

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The attorney general of Israel has said that the country’s banks cannot institute a blanket ban on serving cryptocurrency companies, in comments reported by Globes.

Dr. Abihai Mandelblit told a court in Tel Aviv that banks could not refuse to serve the sector as a rule, and that judgements should be made on a case by case basis to determine money laundering risks.

The comments come in stark contrast to views expressed by the Israeli central bank, which earlier appeared to back the industry in refusing to provide banking services to companies within the crypto sector.

If the court comes to back the view of the attorney general, it has been reported that this would help stabilize the crypto sector in Israel, which has so far been stifled by a lack of banking support.

In common with banks in some other parts of the world, Israeli banks have so far refused to serve crypto companies, even in providing basic services like bank accounts. The difficulties also extend to transactions made where the source of funds is cryptocurrency dealings, as per the case in which the attorney general made the comments.

Mandelblit’s view opposes both the expressed words of the Bank of Israel and its official guidance to Israeli banks, leading some within the sector to become hopeful of a change in policy direction.

The attorney general said the position is based on a series of recommendations made by government agencies, working alongside a team of ministers headed up by Adv. Erez Kaminitz.

Concerns over money laundering and terror financing have led banks in some parts of the world to tighten up their service levels to cryptocurrency businesses. Aside from Israel, India is a notable example, where the country’s Reserve Bank of India effectively said banks were not permitted to serve crypto businesses.

This led to a court case before India’s Supreme Court, with a final decision pending. In the interim, the move by the bank has destroyed the emerging crypto sector in India, with many companies closing their doors or moving overseas to more appropriately regulated jurisdictions.

While the risks of money laundering and terror financing must be controlled by regulators and central banks, many within the Israeli crypto sector will be hoping the attorney general’s words bring clarification to the issue.