Israel’s centralbank said on Monday it would not recognize virtual currencies such as bitcoinas actual currency and that it was difficult to devise regulations to monitorthe risks of such activity to the country’s banks and their clients.

Deputy Governor NadineBaudot-Trajtenberg said there had been public complaints Israeli banks weremaking it difficult for some customers to transfer money from their accounts tobuy bitcoin. But this was something the central bank would not be able to address.Other central banks faced the same problem.

“The Bank of Israel’s positionis that they should be viewed as a financial asset,” Baudot-Trajtenberg told ameeting of Israel’s parliamentary finance committee, noting that there was nogovernment responsibility for investors in bitcoin.

The central bank,Baudot-Trajtenberg said, was studying the issue of virtual currency but notmuch could be learned from what exists globally since no regulator anywhere inthe world had issued guidelines to the banking system on how to act in relationto customers’ activity in virtual currencies.

“There is a real difficulty inissuing sweeping guidelines to the system regarding the proper way to estimate,manage, and monitor the risks inherent in such activity,” she said. “Beyond therisks to the customer there are also compliance risks to the bank.”

The value of a bitcoin, thebiggest and best-known cryptocurrency, surged in mid-December to nearly$20,000, then dropped to less than $12,000 at the end of the month. It was tradingon Monday around $15,370.

ANONYMOUS NATURE

Bitcoin is a publicly availableledger of a finite number of digital “coins”, which backers say can be used asa currency without the support of any country’s central bank. It is “mined” bycomputers, which are awarded new coins for working out complex mathematicalformulas.

Several other cryptocurrencieshave been launched that work on similar principles.

Committee members during themeeting on bitcoin and other cryptocurrencies urged Israel’s regulators toquickly come up with regulations.

“There seems to be a greaterpossibility that they will become central to our financial lives,” said MosheGafni, the chairman of the panel.

He called on regulators tosubmit to the committee within a month how they tend to deal with bitcoin andthe like.

Still, Israel’s regulators aregenerally opposed to giving credence to virtual currencies since they are basedon private initiatives and they do not have the same level of investorconfidence as regular currencies.

“The anonymous nature ofvirtual currencies leads to the possibility that they may be used to laundermoney, finance crime, and so forth,” Baudot-Trajenberg said.

Shlomit Wagman, head ofIsrael’s anti-money-laundering authority said a thorough investigation wasneeded since terrorist organisations use virtual currency platforms.

Last week, Israel’s marketsregulator proposed regulations that would ban from trading on the Tel AvivStock Exchange companies whose main business revolves around bitcoin and othercryptocurrencies.

Source: MyRepublica, 9^th January 2018