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After a fierce legal battle, the Israeli Supreme Court has ruled in favor of the crypto exchange Bits of Gold against one of the largest banks in the state. This comes as a notable legal victory for the cryptocurrency exchange, following attempts by the Israel-based Bank Leumi to block the Israel-based digital currency exchange, citing policy and regulatory reasons, after the bank classified cryptocurrency firms as gambling companies.
The bank, however, maintains its stand against any interaction with the cryptocurrency exchange. Yet, this is a precedent for Israel’s cryptocurrency firms to legally make use of the region’s banking services, paving the way for more crypto exchanges and firms to come up in the region.
The History behind Bank Leumi and Crypto Exchange Bits of Gold
The litigation between the two Israeli entities started in 2017, when Bits of Gold faced an unfavorable ruling from the Supreme Court. Leumi had achieved restriction on the account held by Bits of Gold, due to the fact that the Bitcoin operations could not satisfy the nation’s Anti Money Laundering policies.
This was due to the fact that Bitcoin transactions were ledger based, and the recipients of any transaction could not be individually identified, which made it difficult for the bank to ensure that they followed the law. The fact that the crypto exchange was following Know Your Customer (KYC) procedures was not enough for the bank. They also pointed out that the lack of a central authority, the very idea behind cryptocurrency, makes AML policies hard to follow.
2018 saw a bit of relief for Bits of Gold, when the Supreme Court judge Anat Baron issued a temporary prohibition for Leumi, forcing them to stop blocking the crypto exchange’s account, noting that there have been no violations of AML detected in the five years of its operation. This ensured that the bank could not block account transactions on the grounds that they went to BTC exchanges, which the bank classifies as “websites that execute gambling transactions.”
What is in Crypto Store for Bits of Gold?
Following an issue by the Israeli Security Authority, recommending regulations for cryptocurrency in March 2019, several new ideas have been introduced in support of cryptocurrency, including a regulatory sandbox. This is a huge relief to many cryptocurrency firms.
This ruling comes as a win for Bits of Gold, and the CEO Yuval Roash described it as an “exciting moment for us as a company and for the [cryptocurrency] community in general”; he also added, “We worked hard to set up a company, which met regulatory requirements, in a new industry, and those efforts paid off. I am proud to be a part of this flourishing industry and push it towards the right regulation.”
In addition, this is comes as great crypto news for the cryptocurrency exchange, which had announced plans to expand internationally. They were also all set to launch a service which would enable other international applications and exchanges to trade digital assets, using the Bits of Gold system to manage the liquidity, compliance and banking infrastructures, opening up the Israeli market to similar international firms.
Furthermore, this is also fantastic news for many other firms that have been looking to make their mark in the cryptocurrency domain as well. A regulatory framework would greatly help many firms to make use of the support and services offered by the banking sector, that they were unable to make use of until now. It remains to be seen what decision the bank will have to take, as they have been vocal about their dissent with the ruling, and still maintain their negative stance about cryptocurrency and related firms.