Israeli authorities on Monday established new restrictions on cash payments as a means of combating illegal activity and boosting digital payments in the country.
Since January 2019, Israeli businesses and consumers are subject to limits on cash payments under the Cash Use Reduction Law. Its goal is to turn the country’s citizens and businesses to digital payments, which will allow authorities to more easily track tax evasion, black market activity and money laundering.
As of Monday, the limits of cash payments have been restricted to USD 1,760, or 6,000 Israeli shekels, for business transactions and USD 4,400, or 15,000 shekels, in personal transactions.
More restrictions are expected in the future, prohibiting the saving of more than US$58,660, or 200,000 shekels, in cash at private residences.
Tamar Brach, who is reportedly the party charged with enforcing the law on behalf of the Israel Tax Authority (ITA), recently told Media Line that limiting the use of cash will increase the difficulty of criminal activity, stating:
“The goal is to reduce the fluidity of cash in the market, mainly because criminal organizations tend to depend on cash.”
Meanwhile, the new limits imposed on cash transactions have been seen by some as a good sign for the future adoption of cryptocurrencies in the country.
On Saturday, cryptocurrency influencer and advocate, Lark Davis, told his million followers on Twitter that Israel will not be the first or the last country to introduce this type of restriction and took the opportunity to refer to Bitcoin in its publication.
From Monday Israel will ban cash payments over $4,400! That means you cannot pay cash for a used car, designer bag, or any other higher ticket item.
Not the first or last country to introduce such restrictions.
Got #bitcoin?
— Lark Davis (@TheCryptoLark) July 30, 2022
Starting Monday, Israel will ban cash payments of more than $4,400. This means that you will not be able to pay cash for a used car, a designer bag or any other item of greater value.
It is not the first nor the last country to introduce these restrictions.
Do you have bitcoin?
For its part, the investor Lyn Alden, f.Founder of Lyn Alden Investment Strategy, he claimed that the trend “It will probably continue in other countries over time.”
CBDC and regulation of cryptocurrencies
The country is also one of several nations in the region exploring the central bank digital currencies (CDBC), having first considered a CBDC in late 2017.
In May, The Bank of Israel released responses to a public consultation around its plans for a “digital shekel”, indicating there was strong support for continued research into CBDCs and how it would impact the payments market, financial and monetary stability, and legal and technological issues.
In June, the Bank of Israel revealed that had carried out an experiment addressing user privacy and the use of smart contracts in payments, marking its first technological experiment with a CBDC.
The country is also in the process of creating a regulatory framework around digital assets. During this year’s Israel Cryptocurrency Annual Conference in May, Oz Finance’s Jonathan Shek revealed that Israel’s financial authorities had been preparing a comprehensive and holistic regulatory framework for digital assets.
Although he did not give an exact date, Shek teased that it was coming in the near future because the Israeli government was willing to encourage the growth of the cryptocurrency industry in its state if it was done responsibly.
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