Israel has a five-year plan to establish a blockchain platform that includes smart contracts and tokenizing various classes of digital assets. In late October 2022, Israel disclosed the formation of a blockchain-based platform to enlarge its trading services to cryptocurrencies and other digital assets. According to a press release, Israel wants to bolster its core business value by improving its product range to attract foreign investors. Further, by marketing them to smaller exchanges, they strengthen their digital capabilities and sharing of analytics through the implementation of innovative technologies and Distributed Ledger Technologies (DLTs).
Tel Aviv Stock Exchange (TASE) aims to transform its currency exchange platform by adding blockchain and digital asset-based trading platforms to its financial marketplace. This comes as part of the country’s 2023-2027 strategic plans to revolutionize the financial industry in the region. The CEO of the Tel Aviv Stock Exchange was quoted stating in the strategy document published by the Israeli government that “we see in the coming five years a critical window of opportunity for the incorporation of the Israeli stock exchange in the technological rising that the world’s financial markets are going through.”
The documented plan further details that the blockchain is strategically set to capitalize on its domestic advantage to influence the development and adoption of fintech in the country’s financial sector. TASE is associated with the country’s finance ministry and has already begun plans to issue digital state bonds. The units of these bonds are planned to be published through electronic wallets and paid out in a digital currency form to its pilot participants.
Assessing accessibility, security, and versatility
According to Michelle Blum, CEO of the Australia-Israel Chamber of Commerce (AICC), exchanges such as TASE are evaluating blockchain technology implementation to minimize costs, shorten timelines, improve transparency and make asset markets more attainable. More efficient, open exchanges will benefit all the listed companies traded on the exchange, including Australian businesses. Especially in these tumultuous economic and political times, investors are looking for improved liquidity integrated with clarity and opportunities for diversification.
Crypto-activities have already started showing slow but steady growth in the region, with Leumi, Israel’s largest bank, partnering with Paros to provide a fully-fledged Bitcoin and Ethereum trading service in early 2022. Small portions of gold had their first capital market license in September from the country’s regulator. Additionally, a leading Israeli VC firm launched the Web3 fund in June 2022. Hybrids Bridge Holdings Ltd, the first-ever private company under Israel’s capital markets, insurance, and savings authority, was the first to be rewarded a permanent crypto transacting license. The move came against the backdrop of many other Israeli-regulated companies engaged in crypto activities still awaiting approval for the piece of the crypto market segment from the regulator.
Blockchain is more than just a vessel for cryptocurrencies; according to platforms like the Bitcode method, it has the technology that sets in as the next technological revolution. The decentralized ledger it is based on brings several gains for countries with struggling economies. Poverty pushes people to resort to corruption; the stability of blockchain can help digitalize all documents and archives, allowing for more transparency in processes. Blockchain will enable people to participate in their local economy much more quickly by granting them access to low-cost and fast electronic cash for daily use. It further provides free financial services to people with little to no access to a solid banking infrastructure. Finally, it gives complete control to individuals on the blockchain — they have full ownership and no third party to revoke or confiscate their funds.
Cryptocurrency in Israel
Cryptocurrency does not fit under the legal definition of currency in Israel. However, the tax does apply to crypto holders. Investors must report any capital gains or income from crypto in their annual tax returns to avoid Israel Tax Authority (ITA) penalties, which are very steep. The cryptocurrency market is expanding in Israel, and authorities want it to be regulated so that there can be clarification on the crypto market. Approval from a financial service provider is required for one to be able to buy and sell cryptocurrencies in Israel.
We are rooting for Israel as it is their first time venturing into the world of cryptocurrency. As the Israel stock exchange launch is underway, numerous people are adapting to the cryptocurrency trading platform to improve their business value and attract investors. We will keep you updated with the latest developments surrounding Israel’s crypto exchange TASE and encourage you to continue researching movements in the market to further educate yourself.
Byline: Hannah Parker
