The Israeli Central Bank (Bank of Israel) and the Ministry of Finance recognize the growing popularity of cryptocurrencies in their own country. Since the rapid price increase last year, Israel has been thinking about a government-sponsored cryptocurrency.
Ministry of Finance officials want to use a state-approved cryptocurrency to cut cash in their own country while tackling tax evasion and money laundering. The black market in Israel is estimated at about 22% of GDP. Since the beginning of 2018, the draft has been a state-subsidized digital currency, the “crypto-shekel”.
Cryptocurrencies Popular in Israel
Cryptocurrencies and Blockchain are on everyone’s lips, thanks to the multitude of patents and the technologically advanced industry in the country. Israel was recently ranked as the tenth most innovative country in the world. Therefore, some think that a crypto-based solution against tax evasion and money laundering could not be developed by a state-recognized cryptocurrency, but by the private sector.
Some of the country’s leading banks have joined forces with the government in the world of digital currencies. The Bank of Hapoalim has partnered with Microsoft Azure to leverage blockchain technology to digitize assets.
In February, the country’s Supreme Court ruled that Bank Leumi must lift restrictions on the account of the Bits of Gold crypto exchange until a full verdict is reached that could take years. Attorney Shaul Zioni said the verdict is an important precedent as the Supreme Court essentially ruled “that there is no ban on digital currency trading.”
Strong Future for Cryptocurrencies?
State-approved cryptocurrencies have already been implemented, with Russia and Venezuela leading the way. However, digital currencies in Israel still have some hurdles on the way. Currently, digital currencies are subject to a tax rate of 46 percent on profits for businesses and 25 percent on profits for individuals. The high tax rates could, of course, hinder the future growth of the market.
In addition, Israeli tax authorities closed an agreement with the local Bit of Gold Stock Exchange in July to obtain information on major deposits and information on suspected tax evasion and money laundering cases. However, some see this agreement as a positive sign of regulation.