The Bank of Israel and the country’s Finance Ministry have long considered launching a state-backed crypto. As the country’s cryptocurrency sector continues to grow and enter into the mainstream, discussions about this topic have only intensified.
A state-backed virtual currency will, it is believed, lower the number of cash transactions nationwide and help crack down on tax evasion and money laundering. Development of a legal framework for such a currency started at the beginning of 2018.
Israel is in the Top 10 most innovative countries. Its highly advanced technology industry includes a cryptocurrency and blockchain sector whose development has been rapid and is still booming. A high number of patents has also helped to stimulate growth. The government and top institutional banks are eager to contribute to this development; for example, the Bank of Hapoalim has partnered with Microsoft Azure to implement a blockchain solution for asset digitalization.
On the other hand, there is concern about crypto’s future due to the country’s high tax rates in this domain. Digital currency is subject to a 46% tax rate on profits for corporations and 25% for individuals.