Unable to deposit their Profits, It highly likely that crypto traders in Israel may have been locked out of banking Services. Their only hope, they claim, is the banking Regulators to come out and issue a statement touching the issue.
Banks in Israel are distancing themselves from some $86 million; they are now taking a cautionary approach in the way they handle crypto proceeds.
Gross a crypto trader told the media that most banks in Israel are very skeptical when it comes to crypto gains. Like the banks, the tax authority is also distancing itself from crypto money claiming that it is not responsible.
Gross, added that previously he was able to pay his taxes to the tax authority without encountering issues. However, in 2017, it became a challenge dealing with the banks, especially when attempting to deposit crypto proceeds. Israel, taxes corporates up to 47% on all incomes derived from crypto trading and 25% for individuals.
The tax authority is not to blame, entirely. In another separate interview with a crytpto trader, he claims that banks do not wish to be entangled in any money laundering lawsuits that majorly arise from crypto trading. Banks want to protect themselves. Further, the trader claims that taxing trading gains is next to an impossibility.
In the wake of all these shocking developments, an Israeli court in May 2019, made a ruling that categorized bitcoin as an asset and not currency. However, it is widely known that bitcoin is a virtual currency, a fact many governments don’t want to admit openly. In the same ruling, the founder of DAV received a heavy blow as the court ruled against his submissions. The decision decided that his business was liable to taxation; against his presentation that his company was entirely in foreign currency and was not supposed to pay taxes.
Banks in Israel, in the wake of the ruling in May, have decided to protect themselves, by refusing to accept trading deposits.
Gidi Bar Zakay, a former employee in the tax authority, shared similar sentiments. He states that banks do not want additional liabilities and therefore, are putting up very stiff measures to avoid the possibility of entanglements in expensive money-laundering lawsuits.
Banks have made it near impossible to transfer crypto-related capital, which was possible a few years back. A minority of banks in Israel have also put up a 0% crypto tolerance and do not want anything to do with cryptocurrencies.