As cryptocurrency continues to grow in popularity in Israel, whispers of a possible state-backed virtual currency are circulating.
The Bank of Israel as well as the states Finance Ministry has been considering such a move since the price of Bitcoin peaked at the end of 2017. Since then, officials have been discussing the possibility of a state-sponsored cryptocurrency that could be rolled out to lower the number of cash transactions. It is also hoped that such a move could help to decrease issues such as tax evasion and money laundering.
Financial crime is a big issue in Israel with black market activity accounting for a whopping 22% of the GDP.
At the start of 2018, a draft legal framework was put forward for a state-sponsored cryptocurrency and over the last few weeks, additional information about a possible “crypto-Shekel” has come to light.
Whilst a centralised cryptocurrency is sort of something of a contradiction, the introduction of such a concept could see confidence levels in other cryptocurrencies boosted globally.
Crypto is already all the rage in Israel thanks to a large number of patents filed in the country, as well as a large Israel-based technology industry. It was even ranked as one of the 10 most innovative nations in the world, during 2018.
As well as a state-sponsored cryptocurrency, Israeli institutions such as the Bank of Hapoalim have teamed up with companies like Microsoft to offer Azure for blockchain-based asset digitisation.
If Israel was to launch a crypto-Shekel, it would be following in the footsteps of Venezuela and Russia who have already either launched or announced their intention to launch a digital currency backed by their respective governments.
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