Israel Planning the Crypto Shekel

December 28, 2017         By: Steven Anderson

So the collapse of bitcoin—which was subsequently followed up by the modest rebound of bitcoin—doesn’t seem to have slowed the pace of cryptocurrency development all that much. In fact, recent news emerged that there’s a new state-sponsored cryptocurrency in the works, and from none other than the Israelis.

The digital shekel, as it’s known so far, is currently under consideration, so don’t start hitting the exchanges looking to pick some of these up. The value would be tied to the physical shekel directly—about $0.29 as of this writing—and would be used as a means to reduce cash transactions. This in turn means reduced tax evasion and money laundering in the region, or so it’s hoped. It won’t replace any current currency, reports note, but would rather be a supplement that helps track transactions made by mobile devices and the like.

Such a move is currently in the hands of the Ministry of Finance. It’s looking into the necessary language to add a complete legal framework for the digital shekel, and may well have it ready for the government to consider in January.

This actually comes after the Israel Securities Authority announced that no bitcoin-based companies will be listed on the Tel Aviv Stock Exchange…until there was a regulatory process in place for such firms. Such a regulatory framework would have to address money laundering concerns as well as valuations, though even valuations had to acknowledge the volatility of cryptocurrency in general.

Those two moves dovetail together rather nicely, all told; no bitcoin-based companies listed without a regulatory process, and the Ministry of Finance looking to get such a process in place around the release of its own cryptocurrency adds up. It’s a safe bet that most any new digital currency would get a look from speculators and investors alike, though this wouldn’t be particularly attractive since it’s so directly tied to the shekel itself. Still, for mobile payments functions, this could be a real winner, making it as easy to pay for things online as handing over cash is in real-time.

We may well see this one start up sooner than some might think, especially if the language is ready in January. It might draw some interest, but it likely won’t explode like bitcoin did.