Israel Advances in Crypto Regulation
Foreign residents of Israel could soon enjoy exemption from capital gains taxes on the sale of digital currencies. A bill proposing such exemptions, along with other tax benefits for digital asset holders, has passed through a preliminary reading in the country’s parliament, Knesset, on June 5.
Levelling Crypto Bonuses with Stock Options
This progressive initiative also aims to level up the crypto bonuses with stock options for employees by reducing the currently hefty 50% tax on the former to a more manageable 25%. Sponsored by Dan Ilouz, a 37-year-old Member of Parliament from the ruling Likud party, the bill enjoys full support from the ruling coalition.
The Intent Behind the Bill
The bill is aimed at enhancing Israel’s attractiveness for investors worldwide. As the explanatory note of the bill elaborates, Israeli companies have a huge growth potential in the digital currency field, but the regulatory environment is yet to adapt to the needs of the industry.
Israeli Crypto Companies Weigh In
“The bill proposes that foreign residents also be exempt from capital gains tax on the sale of digital currencies from Israeli-based companies,” said Nir Hirshman and Shauli Rejwan, co-founders of the Israeli Crypto Companies Forum (ICBW3). They believe that this move is a clear signal of regulatory openness.
Reconceptualizing ‘Digital Currency’
The bill also advocates for separating the term “digital currency” from “security.” This is a significant departure from the Israeli Securities Authority’s (ISA) proposed regulatory framework earlier this year, which suggested categorizing “digital assets” as “security” — a move that stirred considerable concern in the industry.
Looking Ahead
Earlier this year, the Bank of Israel teased the development of its central bank digital currency (CBDC) project. The project, dubbed “SHAKED,” has yet to receive formal approval but has the potential to further boost Israel’s status as a hub for digital currency innovation.
