It seems that not only the Venezuelan authorities are seriously aimed at creating their own national currency to solve the financial problems of the state. Israel has been considering a plan for introducing a digital currency supported by the state for quite some time. Since early 2018, the debate on this topic has reached a new level as the crypto industry in the country is on the rise. Now, this issue is being seriously considered by the Bank of Israel and the Ministry of Finance.
According to state officials, this innovation can reduce the volume of cash transactions, which, in turn, can stop tax evasion. The black market, which accounts for about 22 percent of the GDP of the entire economy, can also significantly decline as a result of the emergence of the national cryptocurrency.
Is It an Honest or Dishonest Government Game?
Now the draft legislative framework for a new financial asset is already being developed by the government of the state. This is not surprising for a country experiencing a real boom in the crypto industry. Such a success ensured a large number of issued patents, as well as the development of the technology sector as a whole. This gave rise to rumors that the subject of launching a new financial instrument is not a state, but a business lobby. A number of major institutional banks in Israel began to closely cooperate with IT companies. For example, Bank Hapoalim cooperates with Microsoft Azure in the sector of asset digitization.
And in February, the Supreme Court of Israel banned Leumi Bank from closing the accounts of Bits of Gold customers. This decision spurred other companies interested in working in the Israeli market, openly declaring their claims to the share in the country's crypto industry.
At the same time, some skeptics point to a number of factors that could significantly impede the long-term development of relations between the state and digital assets. Israel's cryptocurrency is already subject to a 46 percent profit tax rate for commercial entities and 25 percent for individuals. Such a high fee for operations with digital assets can theoretically harm the expansion of the market.
Moreover, in July, the Israeli tax authorities concluded an agreement with the local exchange Bits of Gold. The latter will report on the largest deposits to aid in the investigations of tax evasion and money laundering in the black market. For many, this became an alarm bell about the future universal control of the bureaucracy over the entire cryptocurrency industry.
What Are the Advantages?
In general, experts still look positively at the Israeli initiative and predict the solution of many problems in the country through the introduction of a national crypto asset. "A wonderful measure that can solve a number of economic issues within the country. First, it is planned that this currency will be equivalent to the national one. Without problems, it can reduce the real turnover of cash inside the country without using financial intermediaries in the form of banks, thereby discarding financial costs in the form of bank commissions that fall on the shoulders of consumers of this service. Secondly, such a decision in the country also leads to a struggle with the shadow economy within it, which is very commendable since the treasury in almost any country receives less money in the form of lost taxes, and Israel, I think, is no exception," as commented to DeCenter by the managing director partner trading-crypto.ru Denis Bakaev.
As for the obvious contradictions with the "very philosophy" of the cryptocurrency, here, in the opinion of the crypto enthusiast, there are also no serious contradictions. "Thirdly, if it is a national currency, then, naturally, it simply must be centralized, and many will consider that it will no longer be a "cryptocurrency" in the literal sense of the word, since one of the key principles and the main idea is decentralization. At the same time, one must understand that the main task of this cryptocurrency is not anonymity, but the acceleration of mutual settlements between participants in the system. Having increased the speed of trade, it is possible to accelerate the work of many business processes, which, of course, will have a positive effect on the economy of the whole country.
I think we need to see what will come of this, draw conclusions and, perhaps, follow their example. I am confident that Israel will be able to realize this without any problems and will definitely benefit, and clearly more than Venezuela with the cryptocurrency of Petro," Bakaev concluded.
Who Has Already Implemented Something of the Like?
The issue of introducing the national cryptocurrency is now being discussed by a number of central banks and governments of different countries. Among the main problems that the states are facing at the discussion stage, it is worth highlighting the legalization of the cryptocurrency and the specification of the various currencies, since many of them carry different functions and missions.
Russia has long been discussing the issue of introducing its own national cryptocurrency, the CryptoRuble. The new asset will have to be controlled and maintained at the state level, while ordinary citizens will be able to exchange other currencies for rubles. It is interesting that President Vladimir Putin called for a careful regulation of cryptocurrencies, and the central bank said that it would ban all crypto exchanges.
The question of ethics and the possibility of the existence of national cryptocurrencies still causes heated discussions among crypto enthusiasts. Some of them believe that no cryptocurrency is needed, because "the protocol will eventually replace the very phenomenon of states and not just fiat." Others just sneer at this approach. "Of course. Crypto protocols will also replace cars, pants, carrots, horses, underwear, armchairs, toothpaste, poetry, and french fries, as well as concrete, orange juice, green light, traffic lights, cruise ships, AI, cheese, armrests, and spoons," as parried to this thesis by one of the users of Reddit. One way or another, apparently, national currencies will only multiply. Whether they will pass the test of time is another matter.