According to Israeli Army News (English translation below), Israeli banks have begun to limit the size of wire transfer amounts to bitcoin exchanges. The article explains that due to concerns of money laundering, taxation, and legality, banks have asked the Bank of Israel and Finance Ministry to provide an answer as to whether there are any regulatory problems with money transfers being made for bitcoins. So far, the regulators have yet to provide any guidelines and have said that they are investigating the matter. (With forex regulation in Israel being a slow process, it will interesting to see if bitcoin laws get finalized first)

In the time being, without an answer from governing bodies, Israel banks are limiting the value amount of international transfers allowed to be sent to bitcoin exchanges; specifically to Japan, home of MtGox and the most bitcoin/money exchanging in the world.

Join the iFX EXPO Asia and discover your gateway to the Asian Markets

What hasn’t been done yet is a complete ban on bank transfers to bitcoin exchanges around the world, and payments sent to non-Japanese venues have been executed according to Forex Magnate’s internal investigations. Also, while local Israeli bitcoin dealers are known to be out of bitcoins due to the limits on international transfers, they are theoretically still in business (just without stock) and haven’t been approached by regulators. Nonetheless, the events represent that although it is easy to transfer bitcoins around the world, hurdles remain for buyers to actually purchase the currency. While Israel‘s effect on bitcoin demand is probably quite low, if similar measures occur from larger nations it could very quickly sap demand.

On a silver lining, the fact that banks are approaching regulators for a decision means that rules from governments around the world should be forthcoming. As such, if there are provisions that deal with money laundering and legality, it could lead to easier outflows to bitcoin exchanges which would make the currency more readily available. On the other hand, they may just ban them outright due to client safety and money laundering issues.

English Translation of the Hebrew article