The Central Bank of Israel announced on Monday that it does not recognizes Bitcoin to be of similar stature as an actual legal tender. The bank also added that it was difficult to pave out regulations for monitoring of risks in regards to the country’s banks and account holders.
Nadine Baudot-Trajtenberg, the Deputy Governor stated that there have been reports of public complaints made by account holders stating that Israeli banks were making it cumbersome for the investors to engage in money transfer for buying bitcoins. But this issue could not be addressed by the Central Bank since similar issue was increasingly being faced by premier banking bodies across the globe with no solution whatsoever. Baudot-Trajtenberg stated during a meeting of Israel’s parliamentary finance committee that, “The Bank of Israel’s position is that they should be viewed as a financial asset,” while noting that investors in bitcoin did not create the need for any government responsibility.
Baudot-Trajtenberg said that the Central Bank of Israel was studying the cryptocurrency issue in detail. But it has not gained much knowledge since no regulation has yet been issued to the banking bodies by any regulator across the globe till date in regards to monitoring customer’s activity while processing the virtual currency transactions.
“There is a real difficulty in issuing sweeping guidelines to the system regarding the proper way to estimate, manage, and monitor the risks inherent in such activity. Beyond the risks to the customer there are also compliance risks to the bank,” she added.
One of the biggest shortcoming of cryptocurrencies is their extreme volatility. Bitcoin, the flagbearer of the crypto renaissance had a brilliant bull run in 2017 with its value nearing the $20000 mark in December after which it went for a steep fall to below $12000 figures. On Monday, it was trading around $15370.
The regulators of Israel have been urged by committee members to come up with proper regulations in regards to bitcoins and other cryptos during the meeting convened. Chairman of the panel Moshe Gafni agreed to the fact that, “there seems to be a greater possibility that they will become central to our financial lives.” He has asked regulators to submit a report to the committee within one month detailing out how they shall take up the issue of cryptocurrencies.
The regulators of Israel are in complete opposition to the idea of imparting the tag of a legal tender to cryptocurrencies since they cannot build up a similar level of investor confidence as that of regular currencies. Baudot-Trajenberg cannot rely on these digital tokens based on private initiatives since, “the anonymous nature of virtual currencies leads to the possibility that they may be used to launder money, finance crime, and so forth.”
Shlomit Wagman, the head of Israel’s anti-money-laundering authority feels it is imperative to conduct a thorough investigation on cryptocurrencies because the same is increasingly being used by terrorist organizations for funding their malicious requirements.
The market regulator of Israel announced last week it shall ban companies engaged in the chief business of cryptocurrencies from trading on the Tel Aviv Stock Exchange.
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