Israel’s Finance Ministry and the Bank of Israel have been contemplating rolling out a government-backed cryptocurrency. Per a report published by The Jerusalem Post, August 26, 2018, the Finance Ministry believes that a state-sponsored virtual currency would help the country deal effectively with money laundering and tax evasion. Discussions progress as the local cryptocurrency market continues to gain popularity.
Israeli authorities have been mulling over a draft legal framework for an official cryptocurrency since the beginning of 2018 but not much has been said about the “Crypto-Shekel.” Apparently, the use of cryptocurrencies is becoming popular across different aspects of Israeli culture.
Crypto on the Rise in Israel
Israel was recently ranked the 10th leading innovator in blockchain and cryptocurrency. Some crypto enthusiasts, however, believe only the private sector and not the government has what it takes to tackle money laundering and tax evasions.
The government and leading Israeli banks are gaining a foothold in the world of cryptocurrencies. The Bank of Hapoalim recently partnered with Microsoft Azure to introduce Blockchain in its asset digitization program. The Finance Ministry itself has been toying with an official cryptocurrency since last year when Bitcoin’s price hit its all-time high.
Last year’s decision by the Israeli’s Supreme Court to stop the Bank of Leumi from closing customer’s accounts related to cryptocurrency transactions became the catalyst that opened the crypto space to all other interested entities in Israel.
Different governments have in the recent past toyed with government-backed cryptocurrencies for different reasons with Russia and Venezuela leading the pack. Russia stated its intention to release the “Crypto Ruble” in October 2017 to remain in the digital economy and reap financial rewards while Venezuela is trying to see whether the Petro, a digital currency many believe was introduced to circumvent international sanctions, will rescue the sick Venezuelan Bolivar.
The future of Cryptocurrencies
The last two years saw spurts in cryptocurrency prices and ICOs where startups raised millions of dollars within minutes raising excitement and regulatory attention amidst fears of a bubble and potential losses comparable to the dot.com era. The reason behind the said growth is perhaps the raised interest in the blockchain technology’s potential.
Apparently, there are a few factors that could impede cryptocurrencies mass adoption in Israel with the 46% tax tab on crypto-related profits for corporations and 25% for individuals being the main one. Israel’s tax authority signed a pact with Bits of Gold exchange to provide information on huge deposits to prevent tax evasion and money laundering.