Shira Greenberg, Chief Economist at Israel’s Ministry of Finance, has submitted a report containing recommendations for regulating digital assets in the country. The 109-page report was published on November 28 and appeared to have piqued the interest of top government officials.
The top of the agenda for Greenberg is the removal of the barriers clogging the advancement of a proper regulatory framework. The Chief Economist noted that clarifying government policy on new participants in the industry and simplifying the licensing process is the first step in putting Israel on the right track.
Greenberg called for wider powers to be given to the supervisor of financial service providers and opined for the creation of an effective tax regime for the digital asset industry. Furthermore, she noted that the industry would be safer for participants if Israel’s securities laws were expanded to apply to virtual currencies.
“I thank the Chief Economist for the comprehensive, professional, and dedicated work carried out by her and her staff on the subject, which is the most comprehensive and up-to-date report that currently exists on this subject for use by the government,” said Avigdor Lieberman, Minister of Finance.
Lieberman stated that he expects policymakers to rely on the recommendations in crafting a robust framework while adding that it balances the risks and benefits of the country’s financial system.
Other recommendations in the documents include establishing legislation to supervise the issuance of stablecoins and other digital assets that provide financial services. Greenberg suggested that the Bank of Israel should exercise significant powers over digital assets that could have a weighty effect on the economy while noting that attention should be given to the budding niche of decentralized autonomous organizations (DAOs).
Israel has not lived up to the hype so far
Israel has always prided itself in being a tech-savvy country with a youthful population, but these metrics have not been reflected in terms of digital asset adoption in the country. A study by on-chain analytics firm Chainalysis placed Israel 111th out of 146 countries for digital asset adoption rate, a relatively low standing in the grand scheme.
The statistics are even grimmer for Israel as Greenberg notes that only 2% of the population admits to owning a virtual currency wallet. The country has recorded only 21 million distributed ledger technology (DLT) transactions which amount to less than 0.04% of global transactions.
Despite lagging behind in virtual currency adoption, Israel is making significant strides with its central bank digital currency (CBDC), with several pilots in the works by the central bank. The Bank of Israel has gone the extra mile to consider the potential of the digital shekel in facilitating cross-border transactions in a partnership with the Bank for International Settlements (BIS).
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