Financial Institutions Seek To Get Involved In Crypto Field | Barnea Jaffa Lande & Co.

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While Israeli banks are in no rush to accept the blockchain industry and greedily try to keep their distance from cryptocurrencies, elsewhere this is not the case.

Recently, the world’s leading securities, derivatives and financial trading associations sent a joint letter to the Bank for International Settlements (BIS), which is developing standards and criteria for banking supervision, to adopt regulations that will allow them to be involvement in the crypto asset industry.

Some of the associations that have applied to the BIS include the Global Financial Markets Association, the Financial Services Forum, the Futures Industry Association, the Institute of International Finance, the International Swaps and Derivatives Association, and the Digital Chamber of Commerce.

The 64-page document signed by these associations¹ contains an appeal to the BIS not to be too strict on the framework of banks’ involvement in the crypto asset sector. The associations further argue that the BIS should encourage the participation of financial institutions in the crypto asset sector so that the benefits of this new technology can be fully realized and advance the global economy.

The organizations say in their comments, “An overly conservative framework will prevent the participation of regulated banks in crypto asset markets.” Organizations expressed support for market regulation, albeit with a balanced approach that facilitates their active participation.

The blockchain industry in Israel

Blockchain companies are struggling to cope with the banking system in Israel. For the most part, Israeli banks refuse to transfer funds for the purpose of purchasing virtual currencies and even refuse to accept deposits of funds from cryptocurrency trading.

This policy is pushing Israeli companies, including promising blockchain technology companies, to establish or relocate their operations overseas.

Israel’s blockade notwithstanding, an amendment to the Anti-Money Laundering Ordinance is expected to come into effect in November 2021. This amendment will make it more difficult, at least theoretically, for banks to refuse to accept and deposit funds from cryptocurrencies.

¹ https://www.gfma.org/wp-content/uploads/2021/09/joint-trades-bcbs-prudential-treatment-of-cryptoasset-exposures-response.pdf

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