Israel's Ministry of Finance published a set of recommendations Monday for the regulation of digital assets, advancing the country’s foray into the world of cryptocurrencies.
The recommendations call for the creation of a new regulatory infrastructure, legislating licensing powers and supervision over the issuance of backed digital assets, including stablecoins, and the provision of financial services through them. The recommendations also call for legislation to be passed that would transfer supervision over digital assets “that have a significant stability or monetary effect” to the Bank of Israel.
The guidelines also include a proposal for allowing the payment of taxes on crypto held abroad through the Bank of Israel. In addition, the proposal would establish an inter-ministerial committee to oversee the regulation of decentralized autonomous organizations (DAO).
The taxation of cryptocurrencies comprises a major part of the proposal. According to Israel’s tax authority, uncollected crypto taxes from 2019 to 2022 could amount to several billion shekels (one shekel is worth about US29 cents).
Israeli officials have been dipping their toes into the digital asset industry in recent months. In October, the Tel Aviv Stock Exchange (TASE) revealed it was looking into establishing a blockchain-based digital asset trading platform. A month earlier, Israel's markets regulator granted the first permanent license to a private company to “engage in crypto activities.”
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