Bank of Israel Publishes Draft Guidelines for Crypto Deposits

Israel's central bank published draft regulations potentially opening up the country's financial system to crypto companies by requiring banks to examine the companies individually rather than apply blanket refusals.

• The draft, published on the bank's official website on Thursday, says banking corporations have to conduct risk assessments and set out policy and procedures for transfers coming from or going into virtual currencies.
• For licensed crypto firms or financial asset service providers, banks will be "required to examine each case on its own and will not be allowed to issue a sweeping refusal to the service provider."
• Banks will also be required to clarify the source of the money used to purchase crypto, and track the path of movement as virtual currency passes hands "from the time of its purchase until its conversion to fiat currency and deposit into an account with the banking corporation."
• The draft aligns with anti-money laundering (AML) rules that took effect in November. Crypto advocates in Israel told CoinDesk at the time that banks had typically taken an ad hoc approach to accepting deposits involving crypto, and they were hopeful new rules would help banks onboard crypto users more easily.
• The proposal is open for comments, after which final guidelines will be formulated.
• Regulators worldwide are ramping up AML regulations and compliance to prevent the use of crypto for money laundering. Lawmakers in the European Union are working to give its new AML authority strict oversight into virtual currencies. Earlier this year, a group of influential financial firms active in the U.S., including Coinbase, Fidelity and Robinhood, joined together to bring digital assets in step with global AML rules.