Israel has been slow to embrace cryptocurrency as an element of an expanding fintech industry in the country, particularly given its geographical position on the fringes of Europe.
Recently, the rate of startup investment and blockchain research has begun to gain some pace, as the country looks to the US and Europe and their enthusiastic embracing of new technologies, such as blockchain and cryptocurrency.
Some onlookers have suggested that Israel should seize fintech opportunities with more enthusiasm and chase the game, making the country an international financial centre for ICOs. A recent delegation of Swiss representatives and government officials from the banking sector indicates that the country may be reluctant to be left behind in the next industrial revolution.
In a recent trip to Jerusalem, Switzerland’s Minister of Finance Ueli Maurer and State Secretary for International Financial Matters Joerg Gasser headed a delegation which discussed terms for entering the Israeli banking market, both sides agreeing that they would cooperate with each other in areas of financial technology regulation and cryptocurrencies.
Bitmain’s recent step to triple the size of its Israeli development center located in Ra’anana, adding 40 programmers, engineers, and marketing experts to the pre-existing team of 15 people, is an indication that the Israeli government has been allowing the industry to grow, if not actually proactive in its growth.
There is still partially a distrust of Bitcoin due to the digital currency’s nosedive in December 2017, leaving the Tel Aviv Stock Exchange and investors frustrated. The exchange subsequently removed all Bitcoin-related companies and introduced restrictions prohibiting trading or listing rights.
Israeli regulators have been further frustrated by stockbrokers adding “blockchain” to their stock market listings in order to inflate their stock prices. Many investors fear that over-regulation by regulators could drive these companies overseas if the government tightens its current stock market rules which remain restrictive towards crypto.
There have been frequent cases many of Israel’s banks refusing to accept cryptocurrency-related money, and on two occasions banks were forced to accept the money after being taken to court. Earlier in the year, Israel’s largest bank, Bank Hapoalim, was found to have unlawfully blocked a money transfer of USD 195,000 coming from a European cryptocurrency exchange platform, citing unsubstantiated claims of suspected money laundering and terrorist financing.
However, Bitcoin is a fact of life in the country, and the government has acknowledged it as a taxable asset with investors purchasing gold and real estate with the flagship cryptocurrency, cherishing its anonymity.
Israel still remains on the cusp of cryptocurrency adoption but has a way to go before the government is truly convinced. The recent Swiss visit is a promising development.
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