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On Tuesday, Israel’s Ministry of Finance issued a draught law requiring investors to declare cryptocurrency holdings worth more than 200,000 new Israeli shekels (about $61,000) to tax authorities
The reporting requirement is designed to optimize tax collection from virtual currency use, according to a part of Israel’s draught bill dedicated to enhanced oversight of virtual currencies
This is a terrible idea that would damage bitcoin investors while adding zero dollars to Israel’s tax collection, as Hirshman added
On Tuesday, Israel’s Ministry of Finance issued a draught law requiring investors to declare cryptocurrency holdings worth more than 200,000 new Israeli shekels (about $61,000) to tax authorities. The new requirement is contained in a draught of the Arrangements Law, which is a law that is filed to parliament with the yearly budget and contains forthcoming economic policy revisions. Israeli financial regulators are not alone in requiring crypto investors to declare their holdings, however, the onus is usually placed on virtual currency service providers rather than the investors themselves. Taiwan, for example, enacted new anti-money laundering (AML) rules in July, forcing crypto platforms to disclose transactions worth more than $18,000 to the bureau of investigation.
The reporting requirement is designed to optimize tax collection from virtual currency use, according to a part of Israel’s draught bill dedicated to enhanced oversight of virtual currencies. If the law is passed, investors who buy virtual currencies directly or through someone over the age of 18 will be required to declare any holdings of 200,000 new Israeli shekels (NIS) or more if they have been kept for more than one day. The law is opposed by the Israeli Bitcoin Association (IBA) and other crypto supporters.
This news astounds the Israeli crypto community as a whole, and we hope authorities will come to their senses and collaborate with local blockchain entrepreneurs and users to do this the correct way, as was said by Ben Samocha, creator of the Israeli crypto community CryptoTalks and crypto learning platform CryptoJungle. The proposed change comes after Israel’s central bank experimented with a digital shekel. As part of the effort to eradicate Israel’s dark economy, the draught bill on Tuesday included penalties for using cash.
The Israeli Tax Authority (ITA) has suggested an amendment on disclosing crypto holdings to lower Israel’s level of black capital and to disclose unreported assets and income, according to the draught bill. While Samocha appreciates the need for regulators to investigate illegal activity like money laundering and terror funding, he believes that does not imply that Israeli bitcoin (BTC, +0.72 percent) investors should be handled like criminals initially. The IBA’s head of regulation, Nir Hirshman, in a written statement said that as soon as he received the draught law, he notified top ITA officials. Hirshman stated, They were really attentive, receptive, and prepared to discuss adjustments to their proposal.
The IBA sent a letter to Eran Yaakov, the head of Israel’s tax authority, which was shared. It outlined the reasons for the association’s opposition to the reporting requirement, beginning with the allegation that similar rules do not exist for other assets and that such a requirement discriminates against digital currency holders. Israel’s central bank deemed digital currencies to be assets, not currency, in 2018. According to the letter, the reporting requirements would violate crypto holders’ privacy and will result in the establishment of a database of investors, which, if leaked, might jeopardize their security.
This is a terrible idea that would damage bitcoin investors while adding zero dollars to Israel’s tax collection, as Hirshman added. We think that the requirement to declare crypto asset holdings in fiat terms would unintentionally transform law-abiding individuals into tax evaders, just because they failed to notice a surge in one of their asset holdings. The proposal is accessible for public comment until July 31, and Hirshman is optimistic that Israel’s bitcoin community will succeed in altering the law. We still have time, and I am hopeful that our efforts, as well as those of other members of the bitcoin community, to persuade the ITA that this is a terrible idea will bear fruit and that this rule will not be advanced.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
