Cryptocurrency, primarily Bitcoin, is booming around the world. It’s a new, exciting industry, and it’s coming under regulation in many countries. Israel, known as a nation of start-ups, hasn’t been as welcoming of cryptocurrency as other countries,, in the past few months. However, the recent news of Google banning ICO and cyprotcurrency ads has put a dent in the years performance.
Israel’s startups have invested in cryptocurrencies and blockchain technologies.
But where does the government stand on the technology? For years, the government let the virtual currency world expand and thrive. Then in December 2017, things started to change.
Bitcoin was reaching new highs, and the value hit nearly $20,000. Investors were going crazy for the cryptocurrency, but Israel remained reluctant to embrace Bitcoin. The Tel Aviv Stock Exchange had enough when the price of Bitcoin dropped 20% overnight.
Investors lost a lot of money, and the stock exchange announced that bitcoin-related companies would be blacklisted and not allowed to trade or list publicly.
“We will also consider not to allow trading in ‘backdoor costumes’ of bitcoins or alike,” said Shmuel Hauser, head of Israel Securities Authority.
The issue had to do more with stockbrokers than it did other investors. Regulators feared that brokers were using cryptocurrency to inflate their stock. Since cryptocurrencies are unregulated, this could be used to entice investors to invest their money in Bitcoin.
Companies even went as far as adding “blockchain” to their names to inflate their stock price overnight.
And it worked, so cryptocurrencies are very popular in Israel.
Bitcoin has changed the way many companies do business. The anonymity of it all is great, and there’s nothing stopping the investor who wants to remain quiet from trying to learn about buying gold with Bitcoin, or real estate – or anything for that matter.
Further regulations may dampen cryptocurrencies in Israel, and many companies that use blockchain technology have decided to incorporate outside of Israel as a result of a potential stock market ban.
Around the time that the stock exchange started considering a ban, another interesting announcement was made: a digital shekel is in the works.
The digital shekel would allow for digital currency, and depending on how it’s created, it may contain all of the benefits that Bitcoin or other cryptocurrencies offer. But the main difference would be that the state cryptocurrency would be a replacement for the shekel. The digital shekel would be worth the same as a physical shekel.
Price fluctuations wouldn’t be as dramatic, and this means investors would not face the same risk as with digital currencies.
There would be a legal value behind the digital shekel.
Bitcoin has been made a taxable asset in Israel, and an outline has been suggested to make a friendly approach to ICOs, or initial coin offerings.
Hauser previously called for Israel to embrace ICOs to become a digital hub for cryptocurrencies. Investment strategists claim that Israel’s technological abilities doesn’t mean that there are enough Israelis that are willing to make Israel an international hub for cryptocurrencies.
It remains to be seen what will happen to virtual currencies in Israel. There’s a divide with the central bank, which warned investors about the commodity.