Israel Cryptocurrency Rumors Swirl As State-Backed Crypto-Shekel Speculation Grows
For a substantial period, the Israeli government has been considering the introduction of a state-backed cryptocurrency. Due to the positive growth of the country’s crypto space, these considerations are nearly becoming a reality. The virtual currency project was first incepted by the finance ministry and the central bank of Israel when Bitcoin’s value reached a record high at the end of last year.
The main objective of the state-backed digital currency is to reduce the prevalence of tax evasion and money laundering incidences, as well as lowering the amount of cash transactions. As of now, underhand deals contribute a whopping 22% to the GDP of Israel.
In the beginning of 2018, a draft bill proposing the establishment of a state-sponsored cryptocurrency was tabled in the Israeli national assembly. This has fueled speculation that the digital currency will be launched soon, given the current boom in Israel’s cryptocurrency sector.
A Favorable Crypto Trading Environment
As mentioned above, the blockchain and cryptocurrency sectors are blossoming in Israel. This is because the country has advanced technological infrastructure that creates a conducive environment for the thriving of these industries. In this regard, Israel has been rated among the top 10 most suitable locations for blockchain and digital currency startups.
Some people think that the private sector should be the one developing a crypto-based solution to curb money laundering and tax evasion cases. The reason behind this thinking is the fact that private institutions are well acquainted with the sectors through years of experience.
For instance, the Bank of Hapoalim has partnered with Microsoft to use the Azure cloud computing platform to digitize assets using blockchain. Moreover, the Supreme Court of Israel barred Bank Leumi from closing accounts with cryptocurrency transactions, thereby opening a new market for banking institutions in the nation.
Lately, the popularity of state-sponsored digital currencies has increased significantly, with Russia and Venezuela setting the global precedent. Last year, Russia announced the impending launch of the CryptoRuble with the aim of earning revenue from the booming cryptocurrency sector.
On the other hand, Venezuela has introduced the Petro to assist the deteriorating bolivar. However, many people suggest that the Petro is aimed at avoiding international sanctions.
The Future Of The Israeli Digital Currency Sector
While the cryptocurrency sector in Israel is thriving at the moment, there are several challenges that could hamper the industry from becoming fully mainstream. To put this into perspective, the taxation rates imposed on cryptocurrencies are considerably high as compared to other forms of investment. Currently, the nation levies a 45% tax rate on crypto institutional investors, while investors have to part with 25% of their profits.
Furthermore, the Israel tax collection agency recently agreed with the Bits of Gold cryptocurrency exchange to inform the taxman of large amounts of deposits. This move is aimed at fighting against tax evasion and money laundering. Nonetheless, some investors perceive this as an intention to monitor the digital currency trading sector.