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SC's injunction favoring Cryptos might change Economic scenario in Israel

Mar 06, 2018 Posted /  5923 Views

SC's injunction favoring Cryptos might change Economic scenario in Israel

Israel's Supreme Court gave a ruling last week that would bring a roar to the cryptocurrency trading and blockchain innovation in the country. The Supreme Court said that one of the country's biggest banks does not hold any power to shut down a digital currency broker's bank account until a public regulatory review is provided on the status-quo of cryptocurrencies in the Country.

This interim directive was given by the highest court of Israel on February 26. The injunction now forbids Bank Leumi at present from shutting down the bank account of Bits of gold, a company which provides trading and currency exchange in bitcoin, ethereum, and other cryptocurrencies. Blockchain technology completely powers the project.

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This ruling has given great strength to cryptocurrency enthusiasts in the country as the new regulations were deliberated on the virtual currency space on Monday. The regulators had played on to tap the most used rhetoric against the Bitcoin and cryptocurrency- volatility (as the worth of digital currencies fluctuates quite heavily by losing and gaining almost thousands of dollars in a 24-hour cycle). If the country opts for less legal conjecture, it could lead to an accelerated augmentation in the regional trading scenario.

“[The court decision] will help Israel to stand in the frontlines or the frontier of the cryptocurrency industry, as long as the decision is upheld by the Supreme Court,” Ophir Gertner, founder of Smartologic Technologies, told The Jerusalem Post.

All Across the Globe

Since past few days, country after country has followed the same suit. They have been processing regulations per their economic requirements. There is South Korea and France who decided to clamp down on the illicit use of cryptocurrencies in their own way. The U.S. on the other hand in seen in a great predicament as it is the leading country in terms of blockchain innovations. Gibraltar and Switzerland have a more poised think about and offering a hands-off regulatory framework. However, Israel seems to have a mixed assortment of everything.

With love from Israel

Gertner, a blockchain entrepreneur, sees more Israelis capturing the cryptocurrency space once there are more definite and precise regulations. He reasons that Israel is dwelling to 30-40 cryptocurrency and blockchain-related startups.

“If the decision will be upheld, then it would be easier for Israelis to convert fiat [regular] money to cryptocurrencies,” Gertner continued. “More people will hold cryptocurrency accounts, and it will for sure, increase, or most likely, it will increase the amount of trading.”

The cryptocurrency mania in the country is apparent by the big daily queue outside the door of the Bits of Coin currency exchange shop next to the Tel Aviv Stock Exchange. The people are creating a commotion to get their hand on cryptocurrencies.

The Taxation and Banking Authorities

Several thousand Israelis have invested in digital currencies, which certainly have jolted the Israeli Taxation Authorities. On February 19, the Tax Authority proclaimed that it would list bitcoin and other cryptocurrencies as “property, not a currency,” for taxation purposes. Many countries do so, including the United States. This means cryptocurrencies are subject to a capital gains tax ranging between 20-25%, while individuals involved with mining or trading of the virtual currencies as part of the business will pay the official 17% VAT as well.

Numerous Israeli banks have attempted to close down the accounts of cryptocurrency investors and associated businesses since last year. This has been done partially because the value of currencies such as Bitcoin has fiercely fluctuated over one year period.

Gertner thinks another agenda might be at play, that the banks are trying to sideline possible competitors.

“Because the whole concept of cryptocurrency is going to undermine traditional banking,” he said, “by allowing for transactions to be conducted immediately and veritably without the need for a brick-and-mortar bank to transmit the funds.”

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