The Bank of Israel has officially issued its stance on digital currencies, and will recognize such as assets rather than currencies or foreign currencies.
Following on from news late last year that Israel’s Ministry of Finance would form a task team to formulate its position on the use of cryptocurrencies within its borders, the Bank of Israel has now officially deemed digital currencies to be assets rather than currencies.
The revelation comes courtesy of Nadine Baudot-Trajtenberg, the Deputy Governor of the Bank of Israel, who informed a meeting of the Knesset Finance Committee that “Bitcoin and similar virtual currencies are not a currency, and are not considered foreign currency.”
Baudot-Trajtenberg instead offered that digital currencies should be viewed as ‘financial assets’ and that Bitcoin, in particular, does not meet the central bank’s definition of a currency.
Though Baudot-Trajtenberg warned investors of the risks of investing in digital currencies – and that their use necessitated the involvement of anti-money laundering measures, the Deputy Governor went on to say “Our assessment is that … there is a real difficulty in issuing sweeping guidelines to the system regarding the proper way to estimate, manage, and monitor the risks inherent in such activity”.
Presently, Israel does not impose any regulation toward the use of digital currencies – however, the Israeli Tax Authority determined this year that sales of Bitcoin would be subjected to a number of taxes should it not be legally defined as a currency.
Professor Shmuel Hauser – Head of the Israel Securities Authority – recently offered that Israeli regulators should take a ‘paternalistic’ stance towards cryptocurrencies and ICOs – quipping in a recent forum discussion that the Israeli Securities Authority’s “…task is to get ready now in a proactive fashion before an event will occur that will hurt Israeli investors.”
A newly formed task team will likely issue clarity to Israeli investors at some point during the course of 2018.
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