Banks Refuse To Accept Deposits of Bitcoin Proceeds
According to a published by Haaretz on Aug. 6, crypto investors are unable to deposit the profits earned through their Bitcoin investments into bank accounts due to money laundering and terrorist financing concerns.
It cited a Bitcoin investor that is affected by the act, Ron Gross, one among the early Bitcoin investors who benefited handsomely from Bitcoin since 2011, and has been reporting his profit to the Israeli Tax Authority until 2017, his bank started refusing deposit from him,
It is reported that in trying to proof the genuineness of his income, Gross presented a 70 pages of his Bitcoin transactions to the bank, yet that doesn't help and his fund stocked in the bank. This left Gross with no shekel.
The story had it that the banks "base their position on an opinion published jointly by Israeli financial regulators five years ago that warned the public and the banks about the heightened risk of cryptocurrencies as tools for money laundering and even terror financing."
It is reported that last year, Israel Money Laundering and Terror Financing Prohibition Authority cited cryptocurrencies among others as the main areas involving money laundering, which has in last week, issued another warning concerning electronic wallets.
Crypto Investors Unable To Pay Their Tax
Due to the banks refusal of Bitcoin proceeds deposits, Gross was unable to pay his tax. Although the Tax Authority is aware of his issues, the authority went ahead to place lien on both his local bank account and his properties, however his bank account was later excluded.
“The tax authority is aware of the problem, but they say the ball isn’t in their court,” said Gross. “I’ve tried working with almost all the banks, but the minute they hear the word ‘Bitcoin’ they freeze up.”
Bitcoin is not recognized as a currency in Israel but earnings made by trading them are subject to a 25% capital gains tax for individuals and a 47% corporate tax rate for corporations.
Those two factors reportedly result in the Israel Tax Authority expecting taxes from Bitcoin investors, who find themselves incapable of paying them since they cannot deposit the earnings resulting from their investments as local fiat currency into local bank accounts.
The story says that Gross is not the only one affect, other crypto investors are in the same saga. It is reported that the around 300 million shekels ($86 million) is in unpaid tax due on the earnings from Bitcoin and other digital currencies which the tax authority is equally aware.
The outlet also cites the case of Roy Arav, another Bitcoin investor who held his profits on a trustee account at Discount bank operated by local cryptocurrency exchange Bit2C. Still, Discount refuse to move the money from the trustee account to Arav’s personal account. Because of this, Arav could not pay his taxes and filed a lawsuit against the bank.