Banks within Israel have continued to be uncooperative with cryptocurrency as traders report an inability to deposit profits.
Israeli media firm Haaretz reports that approximately $86 million in unpaid taxes resulting from cryptocurrency earnings have amassed due to the banks’ stubborn refusal to accept deposits.
As investigated by Haaretz, the banks are reportedly refusing to accept deposits of cryptocurrency profits out of concern they may be being used illegally. Some traders are unfortunately left without a means of having their profits in fiat currency reach Israel, leaving the question of the sustainability of crypto trading in Israel.
The tax tax authority of Israel is aware of the situation, but states that the problem lies not with them, but with bank policies in the nation.
The tax authority of Israel considers cryptocurrencies to be assets, consequently subjecting them to a 25% capital gains tax for individuals, and 47% for corporations. Not only is the tax authority hemorrhaging money due to unpaid taxes, but also information on cryptocurrency activity that would give insight into money laundering and black market activity facilitated by crypto.
The banks’ decision not to touch cryptocurrency stems from a piece published by Israeli financial regulators five years ago, which warned both the public and the banks about the increased risk of cryptocurrencies as products of illicit activities, including money laundering and terror financing.
Bitcoin investor Roy Arav spoke to Haaretz, having run into the seemingly typical problem of trying to pay taxes by means of Israeli banks. Arav took his bank, Israel Discount Bank, to court.
Discount denied Arav’s request to let Arav move his profits from a trustee account owned by trader Bit2C to his personal bank account. The bank’s policy states that activities in client accounts which originate in cryptocurrencies are not permitted, due to risks of illicit activity that the bank may be exposed to.
Arav reported that the Israeli tax authority was understanding of the problem and allowed him to delay payment until the filed lawsuit could be ruled upon; however, he would be required to pay interest on the back taxes.
I paid the money from money that was supposed to go to buying a house.Roy Arav
The suit prompted the Attorney-General to issue a statement, announcing that regulators and banks had formed a committee to establish a formal position on the imbroglio of cryptocurrencies and bank deposits.
Arav’s lawsuit has been postponed, awaiting the committee’s recommendations.