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The Israeli government is proposing a new crypto reporting requirement as part of its efforts to combat tax evasion and money laundering. However, crypto proponents in the country are opposing the draft bill saying that it will harm Bitcoin (BTC) investors.
The draft bill, which was published by the Ministry of Finance this week, would make it mandatory for crypto users who own or have purchased 200,000 NIS ($61,000) worth of cryptocurrency to file a report with tax authorities, according to Cointelegraph. The draft plans to require any Israeli citizen who held, either personally or on behalf of a child below 18, crypto that meets the threshold value to make the report.
“Virtual currencies have become commonplace among the public, and they are practically traded as an asset on exchanges,” the proposed bill states. “Digital coins can be subdivided into small units, transferred relatively easily by electronic means, and are not subject to surveillance or inspection. In these circumstances, virtual currency is a convenient and effective means of concealing income, accumulating undeclared assets, and money laundering.”
However, the proposal did not please the Israeli Bitcoin Association (IBA) and other crypto advocates who promptly voiced their opposition. “The Israeli crypto community as a whole is astounded by this news and is hopeful regulators can come to their senses and work with local blockchain entrepreneurs and users in order to do this the right way,” the founder of Israeli crypto community CryptoTalks and crypto learning platform CryptoJungle, Ben Samocha said, according to Yahoo Finance.
Nir Hirshman, head of regulation at IBA, sent a written statement addressed to Eran Yaakov, the head of Israel’s tax authority. In the letter, the association pointed out that other assets are not subject to such reporting requirements. The central bank of Israel said in 2018 that digital currencies are assets and not currencies.
“This is a bad proposal that will harm bitcoin investors and won’t add even one dollar to tax collection in Israel,” Hirshman said. “We believe that the demand to report crypto assets holdings in fiat terms will accidentally turn normative law-abiding citizens to tax offenders, just because they missed a spike in one of their assets holdings.”
