While the Knesset Financial Committee analyzes agreements and policies for cryptocurrency use and operations, Israel Diamond CEO Eli Avidar displaces MPs by announcing that Ramat Gan’s Diamond Exchange will shortly issue a digital currency that will be supported by 25% of diamond purchases on the market and its volatility will be based on a transaction-specific index. The Israeli economic journal Globes reports it.
The Deputy Governor of the Bank of Israel, Nadine Baudot-Trajtenberg, noted that “the law defines a foreign currency as a banknote or promise of payment legally recognized abroad but which is not part of a legislative process in Israel, in which case the bitcoin and other cryptocurrencies do not meet the definition legal status of a currency or foreign currency”. In addition to this and regardless of the legal definition, when examining the economic parameters of virtual currencies, the same do not seem to respond to the main function of a currency and in particular to the degree of credibility that users give to the financial instrument.
Trajtenberg also said that from the point of view of currency risks, the Bank of Israel considers that cryptocurrencies run the same risks as money transfers and, for these reasons, they must be carefully monitored. The Central Bank has therefore set up an internal committee to examine the subject.
The President of the Securities Authority (ISA) of Israel, Shmuel Hauser, said that the main problem of digital currencies is to give investors the feeling of being protected. “I am not against virtual currencies, but it is necessary to create an appropriate regulatory framework before allowing companies involved in cryptocurrencies to operate on an exchange”, he added.
The Head of the Israeli Tax Authority, Moshe Asher, has declared, finally, that the institution he presided over is aligned on the positions of the ISA”.