Israel to Fight Bitcoin by a “Digital Shekel”?

Israel to Fight Bitcoin by a “Digital Shekel”?

Israel might be looking forward to creating the state-sponsored cryptocurrency. It will be a response to the world’s bitcoin craze.

Such a conclusion comes out of the claims made by the Israeli finance official in the interview with The Jerusalem Post, which was conducted on the condition of anonymity. According to his words, currently, the Finance Ministry and Bank of Israel are mulling over launching a digital shekel.

Crypto shekel in use: good or bad?

Israel’s national cryptocurrency is expected to record every operation by mobile phone. It will also become an obstacle on the way to tax evasion.

The official informed that the probability of creating the national cryptocurrency had been examined by Israeli regulators for a couple of months. The country’s government might review experimental legal framework in January 2018. Interestingly, the state-sponsored crypto shekel could be very similar in value to the physical shekel that is being in use at the moment.

“You can imagine that instead of giving you a piece of paper saying the Bank of Israel on it, I can send you a piece of digital code that was issued by a central bank,” the official suggested.

However, it is obscure yet whether the digital wallet for crypto shekel will be located in a Bank of Israel account or on person’s mobile phone. At the same time, it is unknown what to do in case the phone with the digital wallet was stolen. Right now it is a question of the regulation.

Are Israeli banks afraid of cryptocurrencies?

Perhaps, banks worldwide indeed consider cryptocurrencies as a threat. That’s why they are looking for measures to take in order to battle them.

“Governments have two options,” said Lou Kerner, who is a partner at a venture-capital firm CryptoOracle and a bitcoin investo, when commenting Israel Securities Authority’s recent decision to bar bitcoin-related companies from trading on the Tel Aviv Stock Exchange.

“They can either roll out the red tape or roll out the red carpet – and they roll out the red tape at their own peril. So, it turns out, these [bitcoin-related] companies will go somewhere else. And the Tel Aviv Stock Exchange loses out. It’s like saying, ‘We won’t allow Internet companies to trade,’” added Kerner.

However, it won’t be that simple for the Bank of Israel to issue the national cryptocurrency. First of all, it requires the approval from the Knesset, the national legislator of Israel. Knesset, by the way, has recently considered the means of reducing the use of cash in the country.

“There’s a lot that people need to think about before going through with this reform. We’re looking at the legal, financial, regulatory and money – laundering sides of this,” explained the financial official.

Foreign experience

Currently, national cryptocurrencies exist nowhere in the world. Not even in Sweden, even though this country is one of the most successful stated which are moving away from cash use.

However, several governments have already expressed the interest in creating a state-sponsored digital coin. In particular, such an interest is being developed in Russia and Dubai.

Earlier Russian Minister of Communications and Mass Media Nikolai Nikiforov said that the country would issue a cryptoruble. As he claimed, it was the initiative of Vladimir Putin.

"I confidently declare that we will launch a cryptoruble for one simple reason: if we do not, then in two months our neighbors in the EurAsEC will do it," said Nikiforov.

Meanwhile, in Dubai Emcredit, a subsidiary of Dubai Economy, and UK-based Object Tech Group Ltd, agreed to work on the development and implementation of emCash. This is an encrypted digital currency, which people will be able to use to pay for different government and non-government services in the largest and most populous city in the United Arab Emirates.