Israel’s Central Bank said it would not recognize cryptocurrency as a currency or foreign currency (currency) because “Bitcoin does not meet the legal definition” and “does not perform the basic functions of currency.”
In a speech Monday. Nadine Baudot-Trajtenberg, acting chairman of the Bank of Israel, announced the official view of the Central Bank on the recognition and regulation of cryptocurrencies such as Bitcoin. The central bank official has agreed to address a series of customer complaints about banks having difficulty transferring cryptocurrencies to purchase cryptocurrencies from their cash accounts.. But he also admitted that it would be “difficult” to issue regulations for cryptocurrencies. The Bank of Israel tends to view all of this as a financial asset.”
The official spoke at a finance committee meeting that discussed the increasing adoption and use of cryptocurrencies.
Bitcoin does not meet the legal definition
Baudot-Trajtenberg argued that cryptocurrencies do not fulfill the basic functions of a currency. “Bitcoin and similar currencies do not fit the legal definition of a currency,” he said. A critical element of the currency, according to the central bank, is the measure of trust from its users.. And he emphasized that this trust can only come from a currency accepted by legal tender, with legal support.
Additionally:
“[A currency] performs the functions attributed to it in the economic literature. It has a stability that allows it to be used as a unit of account, a form of payment and a store of value. None of this exists in cryptocurrencies that are volatile, difficult to transact, and lack precise information about the parties behind them.. “
Banks have no solution yet
Expressing her concerns about using their cash to buy cryptocurrencies, the vice president said when cash funds are exchanged for cryptocurrencies stressed that banks are exposed to compliance risks: “money laundering, financial crime, etc.. It can be used for money.. “He can then transfer the money anonymously to any untrusted organization in Israel or abroad,” he said. He also added that banks should set their own parameters in serving customers who want to own cryptocurrencies. Therefore, he pointed out the problems of the issue and stated that they withdrew as the central bank to avoid this responsibility.
“As far as we know, any banking supervisor in the world has no knowledge of the banking system in terms of what transactions customers take regarding their activities in virtual currencies.
Head of Panel, “Bitcoin can be the center of our financial life”
Central bank, stressed that the government bears no liability to investors regarding Bitcoin and other cryptocurrencies. And he urged commissioners to develop regulations to quickly embrace cryptocurrencies.
According to Israel’s Haaretz, panel chairman Moshe Gafni prominently spoke of Bitcoin and emerging financial technologies:
“Cryptocurrencies seem likely to be at the center of our financial lives.”
The President is scheduled to report back within a month on how to develop a regulatory framework for cryptocurrencies.
The central bank’s remarks on cryptocurrencies came a few weeks after Israel’s capital markets regulator announced a prominent threat that proposed banning cryptocurrency companies trading on Israel’s only public stock exchange, the Tel Aviv Stock Exchange.
Meanwhile, Israeli authorities have also developed an official cryptocurrency called the ‘Digital Shekel’, which will have the same value as cash. They’re working on it.
CCN