Israel’s Ministry of Finance advanced the nation’s entry into the cryptocurrency sector by publishing a list of proposals for regulating digital assets on Monday.
In order to issue backed digital assets, including stablecoins, and provide financial services through them, the guidelines call for the establishment of a new regulatory framework that includes licencing authority and oversight.
Additionally, the proposals urge the Bank of Israel to be given control over digital assets “that have a significant stability or monetary effect.”
The recommendations also include a suggestion to permit the Bank of Israel to accept payments of taxes on cryptocurrency held abroad. A ministerial committee would be established to oversee the regulation of decentralised autonomous groups as part of the plan as well (DAO).
One of the main components of the proposal is the taxation of cryptocurrencies. Uncollected cryptocurrency taxes from 2019 to 2022 might total several billion shekels (1 shekel = $0.29), according to Israel’s tax office.
Israeli government representatives have recently started meddling in the digital asset industry. The Tel Aviv Stock Exchange (TASE) disclosed in October that it was considering setting up a trading platform for digital assets based on blockchain technology.
The goal of the exchange is to encourage the use of cutting-edge technology, such as DLT, the tokenization of various kinds of digital assets, and smart contracts. TASE also wants to investigate several prospective action plans, such as converting current infrastructure to cutting-edge technologies, integrating cutting-edge technologies into specialised platforms, and providing a wide range of services and products for digital assets, among others.
The Bank of Israel’s Information Technology Division set up a test environment based on Ethereum’s blockchain technology in June 2021 to assess the issuing of the digital shekel. A token representing digital shekels and digital wallets was created as part of the bank’s pilot programme for the creation of digital money.
Bank of Israel successfully tested its ability to programme the vehicle ownership certificate in the form of a non-fungible token in a transaction where the requirement for transferring ownership and the transfer of money both occur concurrently, without risk and the necessity for a third party (NFT).
Globally, the idea of CBDCs and the need for establishing crypto regulations has gained some traction and is starting to gain the interest of several nations. The central banks of South Korea, Sweden, India, Japan, Thailand, and Australia have also argued in favor of CBDCs and crypto regulation. Many governments around the globe want to establish stringent but innovation-friendly crypto laws because while they acknowledge the technological potential of crypto, they also see it as a tool for crooks to transfer their money.