Israeli Bitcoin Holders Take on Banks

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A freedom of information petition has been filed demanding that the banks reveal their policies on accounts for proceeds of cryptocurrency trading. Holders of digital currencies in Israel, whose numbers have been growing by leaps and bounds in recent years, have an acute problem. In many cases, the local banks refuse to allow them to open an account in which to deposit money obtained from the sale of bitcoin or other cryptocurrencies.

It appears, however, that local bitcoin holders have reached the limits of their patience. They have begun to take action against the banks’ refusal to cooperate with them. Several lawsuits have recently been filed against banks that refused to deposit customers’ money from the sale of a digital currency, people trading in bitcoins are demanding that the Bank of Israel and the commercial banks should make their policy in this matter public.

A major step on the issue was taken this week with the filing of a freedom of information petition in the Jerusalem District Court by the Israel Bitcoin Association asking that Bank of Israel should be required to disclose to the Bitcoin Association copies of policy documents from each of the banks in Israel concerning money from digital currency, sources inform “Globes.” Bitcoin Association chairman Meni Rosenfeld told “Globes” this week that the Bank of Israel had refused the Bitcoin Association’s request to require the banks to publish their policy on digital currencies, saying that this constituted “commercial secrets.”

The Bitcoin Association earlier issued a call to local holders of bitcoin asking anyone with relatively small amounts of digital currency whose bank had refused to deposit money in their accounts to contact the Bitcoin Association for the purpose of taking legal action in the matter. Holders of small amounts of digital currency were specified because these individuals usually lack motivation for taking their own action against the banks because of the heavy costs involved.

Sources further inform “Globes” that the Bitcoin Association is now funding a legal proceeding aimed at enabling a customer of Union Bank to deposit money from the sale of bitcoin in his account. This petition states: “The bank did not conduct an examination of the petitioner’s specific circumstances. As far as the bank is concerned, the fact that the money came from the sale of bitcoin is enough to rule out in advance the option of depositing it in the petitioner’s account.”

No court in Israel has yet issued a ruling requiring a bank to accommodate activity by a customer dealing in digital currencies. Nevertheless, last June, as reported by “Globes,” Bit of Gold, an Israeli company, posted a significant achievement – a compromise settlement with Bank Leumi bearing approval from the Supreme Court. Under this agreement, which reversed a ruling by the District Court, Bit of Gold can continue holding its account at the bank for purposes of digital currency trading.

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