Israeli Cryptocurrency Law Postponed, Rattles Industry

The law that was supposed to provide legal clarity for the cryptocurrency industry in Israel has been delayed until October, due to last-minute changes made by the country’s finance ministry.

by Nina Dimitrova
31 May • 2 mins
In Regulation

The Israeli Money Laundering Prohibition Orderwhich includes requirements for the activities of cryptocurrency exchanges and was supposed to enter into force on June 1, will be postponed until October.

According to a report by news site Finance Magnates, the reason for the delay is an addition to the new legislation by the country’s finance ministry, covering specifically the money laundering reporting and prevention. It was added last week and has to undergo a series of public consultations, which will take time.

The existing ordinance for the prohibition of money laundering will lapse with the passing of the new law. The process of installing the new law, which includes public hearings, will take time. Consequently there will be a period in which there will be no active legal provision concerning this matter, which will lead to a lack of clarity regarding the identification and reporting obligations imposed by the order on prohibition of money laundering,” said Israel’s finance minister Moshe Kahlon, as quoted by the news outlet.

The new law was welcomed by the cryptocurrency industry and investors in Israel, which currently operates in a regulatory grey area and encounters obstacles from the country’s banks. However, the postponement will in fact prolong the legal uncertainty and, consequently, the sector is not very happy.

“The postponement of the law that deals with digital currencies will leave start-ups in the same situation, and will cause a situation in which these companies will have to think twice about whether or not to stay in Israel… This is a blow that will hamper the efforts of Israel to become a leader in a rapidly developing field of technology,” Manny Rosenfield, head of the Israeli Bitcoin Association said in a statement, quoted by Finance Magnates.

Israel is dubbed “The Startup Nation” and, according to some estimates, its ventures raised USD 5 billion in capital in 2017. Israel is no stranger to cryptocurrencies and the blockchain technologies either. For example, it is home to CoinTree Capital – a cryptocurrency investment fund, Hexa Labs – a decentralized solutions company, Bancor Network – a digital asset exchange, and eToro – the world’s largest social trading and investment platform that is currently expanding into virtual coin trading.