Digital currencies as treated as assets in the past will not be treated the same in Israel anymore. As the news suggests, Israel is suggesting that bitcoin should not be viewed as currency or Fiat and not as an asset. This decision came to light after a four-member legislative team in the is really decided this. This decision is influenced by the fact that the Israelis should charge tax on digital capital and treat it as fiat, their country currency.
The news that matters
The four legislative members of the Knesset are, MK Oded Forer, Yevgeny Soba, Yulia Malinovsky, and Alex Kushnir, who suggested these particular changes in the treatment of bitcoin in Israel as reported by Globes, a media outlet in Israel. On September 22nd, they advised the administrative body in Israel to follow the existing laws related to bitcoin purchase and trading. This change will help bitcoin not be a subject of capital gains tax. The existing tax policy looks at bitcoin as an asset which is they charge 25% of the total every time conversion of bitcoin happens from an individual Account. Also, the short term lenders have to pay 15% tax on the conversion.
Now, if the proposed changes become law, bitcoin will be easily available and accessible at lower rates than anything else. The tax collection of the Israeli government is very low for other currency-related exchanges or conversions but as this is still in the asset section, many cannot have access to the digital currency.
As Forer says, the blockchain system should be applied to make transactions during this pandemic which is secure and reliable. The pandemic has helped many countries realize that they lack technicality and need more power of technology to deal with living. The blockchain system surely is a good option to make payments. Several lockdown phases were announced in Israel to reduce the outspread of the virus. The cash transactions have almost halted in this country, the only help can be if transactions are made cashless and digitalized.
Cashless transactions might seem a little weird at the starting point, but as this pandemic has already hit again, people will start acknowledging the benefits of cashless transactions because social distancing has to be maintained strictly.
What’s stopping digitalization in Israel?
The bureaucrats are becoming the main reason for the halted digitalization of the economy. The fight about considering crypto as a currency or an asset is still a valid fight in the Israeli government official meetings. In Spite of the fact, there is an increasing number of blockchain activities and the rise in the value of cryptocurrencies, Israel is still in a dilemma whether to keep bitcoin in the asset category or to remove it from this particular boundary. The issues saturated when the government officials demanded capital gains tax on a particular time amount from an investor who is also a resident of Israel, but due to various reasons and loops of the system, the issues are still fresh and the dispute among officials regarding bitcoin is a valid one!