The Bank of Israel, which is the central bank of Israel, has today published a guideline draft for crypto deposits. The draft contains proposed rules that will most likely open the country’s financial system to cryptocurrencies.
The draft can be found on the official website of the central bank.
The cryptocurrency market keeps on growing and the lack of proper regulation to govern their use in most parts of the world makes it difficult for authorities in different parts of the world unable to regulate the market properly.
According to the published draft, the Bank of Israel shall now be studying crypto firms individually rather than applying a collection approach.
Individual banks will be required to do risk analysis when indulging themselves in the crypto business. They will also be required to establish processes and rules for cryptocurrency transfers, both for the coins coming in and for the coins going out of the banks. As such, banks will have the prerogative to accept or reject fiat deposits originating from crypto transactions if the source is dirty.
Israeli banks will be required to always identify the source of the money used in purchasing digital coins. They should also trace how the cryptocurrency moves from one person to the next from when it was purchased to when it was converted to fiat money and deposited into a bank account.
The draft rules align with anti-money laundering (AML) regulations that were introduced in November last year.
Following the enforcement of the AML regulations, Israeli banks had taken a hard stance in accepting crypto users. It is believed the published guidelines for crypto deposits shall make it easier for the banks to accept crypto users.
The final guidelines
Final guidelines shall be published once the bank receives comments and feedback from the public and the Advisory Council on Banking Matters.
The bank has not given a timeline when it shall have the final regulations published but the published draft already acts as a pointer to how the market shall be regulated.