A cryptocurrency exchange in Israel has agreed to share certain customer transaction information with the country’s tax authority.
The Israel Tax Authority (ITA), the country's tax collector, recently entered an agreement[1] with Bits of Gold Ltd., a major Israeli cryptocurrency exchange, to obtain customer transaction information. The agreement requires the exchange to provide information about clients whose total transactions exceed $50,000 within the past year.
Under the country's Prohibition on Money Laundering Law[2], suspicious deposits and withdrawals, as well as all deposits greater than 50,000 Israeli new shekels (about $13,700 at time of press), must be reported to the Israel Money Laundering and Terror Financing Prohibition Authority (IMPA). To verify the legitimacy of their transactions, account holders must submit supporting documentation to the IMPA.
Although Bits of Gold is required to provide customer transaction information to the IMPA under Israeli law, there is no such requirement for the ITA. Apparently, the country's privacy laws limit information exchange between governmental entities – in fact, an Israeli court rejected a 2002 ITA request to obtain a bankrupt bank's client list due to these laws.
Additionally, the ITA has interacted with Bits of Gold in the past, having audited the exchange just last month. The tax authority was not targeting the company itself but, rather, its larger clients.
The exchange emphasizes its intention to respect both its customers' privacy and Israeli law. The company's chief growth officer, Tomer Niv, stated[3] that it only transmits legally required information:
"We at Bits of Gold only transfer the information we are required by law, which is still in the hands of the Israel Money Laundering and Terror Financing Prohibition Authority, in order to protect the privacy of customers on the one hand, and the provisions
