The most well-established cryptocurrency exchange in Israel, Bits of Gold, just scored a small but significant victory in its legal battle against Bank Leumi. The exchange got a temporary injunction from Supreme Court judge Anat Baron that prevents Bank Leumi from blocking its account, allowing it to operate temporarily, according to reports on Israeli outlet Calcalist. The injunction will remain in place until the supreme court gives a final ruling on the case.
Israeli Banks and Bitcoin
The case is significant because banks in Israel are notoriously opposed to Bitcoin. Banks in this country make it hard if not impossible for people to transact with exchanges or other institutions that might be involved with Bitcoin or other cryptocurrencies. Cryptocurrency-centric businesses may find it impossible to open a bank account with any Israeli bank at all. Authorities recently stated that banks are free to reject customers who deal with cryptocurrencies, supporting the banks’ staunch anti-Bitcoin stance.
Bits of Gold Operating Legally for 5 Years
Bits of Gold has nonetheless operated legally and transparently for 5 years now using its Bank Leumi account. This was part of the argument that judge Baron used to justify the injunction she issued. Judge Baron added that Bank Leumi’s argument was based purely on speculation and fear that Bits of Gold’s operations are putting the bank at risk. That argument has proven to be false so far.
Israeli Banks Have the Last Word
However, this injunction does not prevent other banks from blocking incoming or outgoing bank transfers from or to Bits of Gold’s account. Calcalist reports that other banks in Israel are restricting transactions and other operations that are connected to this and other cryptocurrency exchanges. Therefore, Israeli Bitcoin enthusiasts might become more dependent on cash transactions to buy or sell coins. This should bode well for sites like LocalBitcoins – which operates under the radar in other countries in which there are similar restrictions – or face to face cryptocurrency to fiat exchanges using cash.
The Noose Tightens
That is, unless the parliament passes a law to restrict the maximum amount of cash that can be used in a single transaction. The Israeli parliament – the Knesset – has been debating the possibility of limiting cash transactions to as little as $1,450 USD per transaction, according to reposts on Israel National News. This could make it even more difficult to either acquire or sell Bitcoin and other cryptocurrencies in a country that is famous for embracing and developing cutting-edge technology.
Bitcoin is Still Huge in Israel
Despite fierce opposition from the banks and unfavorable legislation, Bitcoin and other cryptocurrencies are still huge in Israel. Apart from the grassroots support they enjoy, some elements within the government are more open minded about them. Prime Minister Binyamin Netanyahu recently stated that traditional banking operations could become obsolete and could be replaced by cryptocurrencies like Bitcoin. The Israeli Tax Authority has also shown more pragmatism, recently releasing guidelines for cryptocurrency taxation in the country.
Judge Baron joins that chorus of official voices, urging a more fact-based approach to the operations of companies like Bits of Gold. Pending a final ruling, this could be the moment in which a precedent to limit the power of the banks in Israel emerges. It all depends on the final ruling now, which can take a few years. In the meantime, Bits of Gold will be able to operate through its Bank Leumi account even if the bank doesn’t like it.