It is thought that Israel will neither be the first nor last nation to impose cash-restrictive measures to spur digital payments.
Authorities in Israel on August 1, 2022, announced that it has put in place more restrictions on cash payments as a strategy to fight illegal activity and spur digital payments in the nation.
Since January 2019, Israeli businesses and consumers have seen limits on cash payments under the Law for the Reduction in the Use of Cash. It is aimed at moving the country’s citizens and businesses toward digital payments, enabling authorities to more readily track tax evasion, black market activity, and money laundering.
From August 1, 2022, the limits on cash payments have now been tightened to 6,000 Israeli Shekel (NIS), which is equivalent to $1,760 United States dollars (USD) for business transactions and NIS 15,000 ($4,400) in personal transactions.
More restrictions are expected to come in the future, banning the stockpiling of over NIS 200,000 shekels ($58,660) in cash at private homes.
Tamar Bracha, who is allegedly in charge of executing the law on behalf of the Israel Tax Authority (ITA), recently told Media Line that restricting the use of cash will increase the difficulty of criminal activity, stating:
“The goal is to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash.”
In the meantime, the new limits placed on hard-cash transactions have been seen by some as a good sign for future crypto adoption in the country.
On July 30, Crypto influencer Lark Davis told his 1 million followers on Twitter that Israel is not the first and will not be the last nation to introduce such limitations, and took the chance to reference Bitcoin in his post.
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.
— Lark Davis (@TheCryptoLark) July 30, 2022
In the meantime, strategic investor Lyn Alden, the founder of Lyn Alden Investment Strategy stated that the trend “will probably continue to other countries over time.”Buy Crypto Now
CBDCs And Crypto Regulation In Israel
The nation is also one of the many nations in the region exploring central bank digital currencies (CBDCs), having first considered a CBDC at the end of 2017.
In May, the Bank of Israel revealed the responses to a public consultation around its plans for a “digital shekel,” indicating that there was huge support for continued research on CBDCs and how they would affect the payments market, legal and technological issues, and financial and monetary stability.
In June, the Bank of Israel said that it had conducted a lab experiment that examined user privacy and smart contracts’ use in payments, marking its first technological experiment with a CBDC.
The nation is also in the process of developing a regulatory infrastructure around digital assets. During 2022’s yearly Israel Crypto Conference in May, Jonathan Shek of Oz Finance showed that Israel’s financial authorities had been preparing an extensive and holistic regulatory network for digital assets.
While he did not provide an exact date, Shek teased it would come soon since the Israeli government was keen to foster the growth of the crypto sector in their state in case it is done responsibly.