Israel: Bitcoin is an Asset, Not a Currency

Israel: Bitcoin is an Asset, Not a CurrencyOn Monday, The Supreme Court of Israel, had forbidden Bank Leumi from obstructing account activity of the Bits of Gold bitcoin exchange.

This decision means banks in Israel are now required to permit cryptocurrency trading, and are prohibiting from limiting the bank accounts of companies associated with the industry.

This has been a great victory in the Israeli cryptocurrency industry that will set a precedent for other bitcoin businesses struggling to get banking services.

Bits of Gold has always held an account with Bank Leumi since 2014, and in 2015, the bank decided to close its account despite everything was legally right. Bits of Gold since then decided to apply to the court for permission to continue using the account.

The Tax Authority’s position, which was expressed in the past, is that bitcoin is a property, not a currency,” the Israeli agency clarified upfront.

The circular also notes that “for purposes of income tax, in accordance with the circular, a distributed means of payment is an asset, and therefore a person whose activity as aforesaid does not reach a business is only entitled to capital gains tax and the person whose activity in the field reaches a business (trade in a distributed method of payment), tax will be paid as any business activity.

The seller will also have to present the evidence of the transaction attaching the pages of the bank accounts through which the funds were transferred or at least a computer screen capture demonstrating the sale and purchase and the date/time of the operation.

Just for reminder, in December last year,  Israel’s markets regulator said that they will propose regulation to ban companies based on bitcoin and other digital currencies from trading on the Tel Aviv Stock Exchange.

Shmuel Hauser, the chairman of the Israel Securities Authority (ISA), told then that he wants to bring the proposal to the ISA board  and if approved, it should become subject to a public hearing and then the stock exchange bylaws would need to be amended.

“If we have a company that their main business is digital currencies we would not allow it. If already listed, its trading will be suspended,” Hauser then said, adding the ISA must find the appropriate regulation for such companies.

Teuta Franjkovic

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