For some time now the topic of a state-sponsored cryptocurrency has been making rounds in the halls of Israel’s Ministry of Finance.
Since the Bitcoin boom of late 2017, Israel has been considering a crypto-shekel future. The aim is to decrease the cash transactions and the incidents of tax evasion and money laundering. In May 2018, the ministry announced via a draft endorsed by Moshe Kahlon, the Finance Minister about new reporting obligations for financial service providers with respect to cryptocurrencies.
According to Bitcoinist, 22% of Israel’s GDP is estimated to be black market activity furthering the proposition of the ‘crypto-shekel’. Israel has the technological infrastructure in place to set up the crypto-system, with the nation ranked as the 10th most innovative in the world. Tel-Aviv’s Silicon Wadi is number 5 in the global top technology hubs and the country’s patent applications rose by 25% in 2016. Also, Israel’s largest bank the Bank of Hapoalim has joined hands with Azure to digitalize their assets using blockchain.
Other countries that have embraced cryptocurrency trends are Russia and Venezuela. The former stated their intentions of pushing for a “cryptorubble” in October 2017 to increase Russian presence in the digital world. Economically struggling Venezuela has looked to the cryptocurrency Petro as an alternative to the falling Venezuelan bolivar.
The critics point to the existing regulations which state that the virtual currency bears a 46% tax on profits made by corporations and 25% tax on those by individuals, which will hinder the market’s growth. Bits of Gold, which offers buying and selling services of Etherum and Bitcoin entered into a deal with the Israeli tax authorities to communicate information about larger cash deposits thereby confronting cases of money laundering and tax evasion.
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