Israeli-based crypto exchange Bits of Gold received a license to operate as a Virtual Assets Service Provider (VASP) from the country’s market regulator the Capital Markets, Insurance, and Savings Authority. Markedly, this is one of the few licenses that has been issued for a crypto service provider in Israel.
Hybrid Bridge Holdings Ltd. was the first company to receive a permanent license from the Israeli regulator earlier in September. Meanwhile, it is quite unclear if the company has begun its operation or if it has a running product yet. Thereby, making Bit of Gold the first active local crypto firm to receive a Capital Market Authority license.
As part of the provisions of the license, Bits of Gold holds the right to collaborate with local banks and other financial institutions in the country. This is a major milestone as Israeli regulators have been seeking means and coming up with strategies to bridge the gap between traditional financial institutions and the cryptocurrency industry.
“With the license and the Bank of Israel recent orders we will be able to resolve most of the bank issues,” a spokesperson from Bit of Gold said.
Israel Banks Support Crypto Industry
Bits of Gold which offers crypto trading and brokerage service to customers has been in existence since 2013 and eventually applied for the license four years ago.
Currently, Bits of Gold is mulling the idea of launching a platform that brings together local and European banks as well as fintech companies in a bid to provide crypto services for sale to clients. Alongside, the company wants to serve as a crypto custodian starting from October, through its newly launched digital wallet.
Previously, there was an existence of a level of friction between the local banks and the crypto industry. These local financial institutions regarded digital assets as potential threats both to the financial system and to their clients.
To mitigate these fears, Israeli regulators introduced a set of anti-money laundering (AML) schemes in the latter part of 2021 to help combat risk exposures to cryptocurrencies. Invariably, this helped many banks to create a balance between fiat services and crypto.
This year, the Bank of Israel published a drafted regulatory framework on AML and Terrorism Financing (CFT) risk management for the commercial banks that are involved in crypto-to-fiat transaction offerings. Following the publicity of the regulatory framework, the largest bank in Israel Leumi Bank began to accept Bitcoin (BTC) and Ethereum (ETH) in partnership with Paxos.