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Israeli banks resisting bitcoin exchanges

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Israeli banks resisting bitcoin exchanges

Jun 11, 2013

It's no secret that Bitcoin represents a huge change in the way we exchange money and that this challenges established financial institutions. That has led to a noticeable amount of push-back from banks and governments.

While the decentralized nature of Bitcoin means it cannot be shut down by any government or financial institution, such organizations can make it difficult for people to purchase the digital currency in the first place. That would effectively restrict access to the cryptocurrency. It appears that is happening to some degree in Israel, as reports from the Israel Army News website and users on the Bitcoin Forum indicate.

Reports from the Israel Army News website and users on the Bitcoin Forum indicate that Israeli banks are unofficially restricting access to virtual currencies by denying bank transfers to known exchanges. Even though the Google-translated version of the Israel Army News report is less than perfect, it appears that banks are limiting transactions between Israeli residents and known Bitcoin accounts, and in some cases even refusing them. Specific banks were not referenced on the Israel Army News website, but a user on the Bitcoin Forum reported that his/her bank, "Mizrahi Tfahot", sent the following email in response to a request for transfer of funds to Mt. Gox:

From a check made in the bank it seems that your account contains activity involved with virtual currency. The activity is characterized by issuing wire transfer to a company called MTGOX, through which this currency is purchased. Virtual currency is anonymous and unregulated. Trading them is not regulated and thus poses a high risk for the bank. Therefore, the bank has decided not to allow such activity for our customers, until guidance/clarifications are issued by the Israel Central Bank. You are requested to stop any such activity. We inform you that if you do not comply, we will have to refuse any activity directly or indirectly related to this area of activity.

It appears from these two reports that Israeli banks are giving fear, uncertainty and doubt (FUD) as their reasons for not dealing with bitcoin exchanges. However, by their own admission there are no regulations in the Jewish state to rule against use of bitcoin exchanges.

Do you live in Israel? Have you faced difficulties in buying digital currency? Let us know.

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