Even though Bitcoin has been legalized in the country in 2017, as a taxable asset, there have been many uncertainties as to the regulatory framework for cryptocurrencies in Israel. The government will now introduce a new crypto regulation infrastructure that will prevent fraud, enhance user protection and make crypto trading safer for Israelis.
The Current Situation with Crypto in Israel
Bitcoin is a legal taxable asset in Israel since 2014. It is not regarded as a traditional currency, of course, but it is taxable, and Bitcoin sellers need to pay a 25% capital gains tax each time they sell coins. Miners, on the other hand, need to pay a 17% VAT and a corporate income tax, considering they are treated as a business.
However, despite these measures, there have been illegal practices associated with Bitcoin, scams, money laundering and even terrorism funding. Criminals are taking advantage of the blockchain technology behind Bitcoin, offering alleged investment opportunities to people as part of their fraud schemes.
But the fact that the government is familiar with these cases only proves how secure the blockchain technology is and, as the CEO of the Israeli Bitcoin Association Noa Mashiah said, shows that there is a paper trail that is irrefutable, an open transaction log, which exposes criminals and helps law enforcement agencies to get to them.
The New Regulation Infrastructure
As part of the new regulation infrastructure, Israel will set up order by establishing clear standards of crypto trading, trying to protect crypto investors. Fintech companies and other crypto service providers will be able to apply for an official operating license and submit reports, just like banks do, to further boost confidence in the crypto market.
Criminals will be banned from the market using thorough customer identification regulations. They won't be able to use the technology behind crypto to their benefit and unsavoury plans. Plus, the authorities are currently working on a bill that will require users to declare cryptocurrency purchases above $60,000, keeping criminals at bay and creating a way safer and more secure crypto environment.
1114.289 SRY