A new bill has been passed in Israel that will exempt foreigners from crypto-taxes.
The foreigners residing in Israel could get an exemption on taxes from the sale of cryptocurrencies. This bill was passed on June 5th, in the Knesset.
According to sources, the bill doesn’t just exempt taxes but also increases the crypto bonuses for employee stock options by decreasing the tax rate from 50% to 25%. This bill was introduced and sponsored by Knesset member Dan Ilouz.
The explanatory note of the bill showcases the intent of creating an attractive front for the country in front of global investors.
According to the co-founders of Israeli Crypto Companies, Nir Hirshman and Shauli Rejwan, the bill states that taxes from capital gains will be exempt for foreign residents who trade with Israeli-based companies. They believe that the country is progressing in regulatory openness.
The bill also suggests using the term “digital currency”, creating a separation between security and crypto assets. According to the regulatory framework, the Israeli regulators proposed to tag cryptocurrency under security, which received a backlash from crypto enthusiasts.
This framework was introduced early in 2023. According to a regulator, The Israeli Securities Authority created a framework to regulate and monitor digital assets as a considerable number of investors are exposed to digital assets and over 150 companies operate in Israel.
The regulator put forward a plan in January 2023, explaining its goal to achieve two things: first, to address the risks related to investing in digital assets, and second, to provide the authorities with the ability to create rules and regulations.
The authority has introduced multiple committees in the past couple of years in order to monitor and encourage the use of digital assets in Israel. The latest committee was assigned the task of examining the authority’s policy on cryptocurrencies.
According to the amendment, the definition of the term digital assets and securities was added to better differentiate between the two investment products included in the proposal.
Furthermore, the definition of digital assets was termed as a digital “representation” of the value or the rights of financial investment in the amendment.
The authority also wants to monitor the digital assets industry, including establishing terms and requirements for the issuers and middlemen and also issuing sanctions for non-compliance.
The bill opened a gateway of communication for the comments of the public until the 12th of Feb. It also strives to introduce a requirement for issuers of cryptocurrency to create a prospectus-like document that states the terms and conditions situated for that particular crypto before issuing it to the public.
The protection of investors is the next major priority in this bill as it safeguards the rights of the investors and provides them with transparency. Middlemen are required to follow the rules and regulations that are similar to the ones applied in the traditional securities industry, such as the need to hold a license and meet the standard capital adequacy laws.
According to the reports, the bill also addressed the risks that are connected to digital assets, such as the potential risk for fraud and manipulation of market changes, providing power to the authorities to intervene in case of any suspicious activity.
This was stated after the chief economist, Shira Greenberg, presented a list of recommendations on how to battle the crypto laws and encourage crypto adoption.
In the respective list, Greenberg suggested increasing investment protection by imposing stricter investor protection laws, such as creating licensing requirements on trading platforms and ensuring that money coming from digital assets is handled in a safer way.
However, the Bank of Israel is yet to make a formal decision on this bill. The bank has also provided suggestions on possible outcomes for developing a digital shekel.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
