Report: Israel May Adopt Cryptocurrencies to Prevent Tax Evasion

While countries like China, India and the U.S. are limiting the cryptocurrency sector, smaller countries like Singapore, Venezuela, Colombia and Malta are creating optimal regulations and infrastructure for the burgeoning digital asset ecosystem.

Now, Israel is apparently toying with the idea of a state-backed cryptocurrency, according to the Jerusalem Post.

The move is said to prevent tax evasion by using the prowess of blockchain technology-e.g. tracking a citizen's transactional data in real-time while enabling faster transactions.

While the development may surprise some outside of Israel, the country reportedly has a vibrant cryptocurrency ecosystem, even boasting a dedicated blockchain association.

The country's largest banks have also forayed into cryptocurrencies in their own capacity.

Even the country's judicial system avoids baseless decisions against cryptocurrencies.

The supreme court allowed more access to cryptocurrencies and related businesses, such as crypto-gambling and casinos, for the citizens, spurring significant adoption among citizens and institutions.

Cryptocurrency transactions are reportedly recognized in the country as well, despite the lack of a well-defined framework.

A high tax caveat remains, as cryptocurrency capital gains are charged at a mammoth 46 percent for institutions and 25 percent for individuals.

While high taxation and government intervention go against the ethos of digital currencies, regulation is an inevitable feature of any rising industry, and states like Israel may propel growth and set an example for a sustainable crypto-economy-with both state-backed and typical cryptocurrencies operating simultaneously.