Israeli authorities on Monday introduced new restrictions on cash payments to curb illegal activity and boost digital payments in the country.
Since January 2019, Israeli businesses and consumers have been subject to limits on cash payments under the Cash Use Reduction Act. It aims to steer the nation’s citizens and businesses toward digital payments, making it easier for authorities to track tax evasion, black market activity, and money laundering.
Since August 1, limits on cash payments have been tightened to 6,000 Israeli shekels (NIS), which is equivalent to 1,760 US dollars (USD) for commercial transactions and 15,000 NIS (4,400 USD) for personal transactions.
Further restrictions are expected to follow in the future, prohibiting the storage of more than 200,000 NIS shekels ($58,660) in cash in private residences.
Tamar Bracha, who would be in charge of law enforcement 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 rely on cash.”
Meanwhile, the new limits on hard cash transactions have been seen by some as a good sign for the future adoption of crypto in the country.
On July 30, Crypto influencer Lark Davis told his one million Twitter followers that Israel was neither the first nor the last country to introduce such restrictions, and took the opportunity to reference Bitcoin in his message.
Starting Monday, Israel will ban cash payments over $4,400! This means you cannot pay cash for a used car, designer bag, or any other higher ticket item.
Not the first nor the last country to introduce such restrictions.
— Lark Davis (@TheCryptoLark) July 30, 2022
Meanwhile, strategic investor Lyn Alden, founder of Lyn Alden Investment Strategy said that the trend “is likely to continue in other countries over time”.
CBDC and Crypto Regulation
The country is also one of many in the region exploring central bank digital currencies (CDBCs), having first considered a CBDC in late 2017.
In May, the Bank of Israel revealed responses to a public consultation on its “digital shekel” plans, indicating there was strong support for further research into CBDCs and their impact on the payments market. , financial and monetary stability, and legal and technological issues.
In June, the bank of israel revealed that he conducted a lab experiment examining user privacy and the use of smart contracts in payments, marking his first tech experience with a CBDC.
The country is also creating a regulatory framework around digital assets. During the year of this year Israeli Crypto Conference in MayJonathan Shek of Oz Finance revealed that Israeli financial authorities have prepared a comprehensive and holistic regulatory framework for digital assets.
Although he did not give an exact date, Shek announced that it will happen in the near future as the Israeli government is keen to foster the growth of the crypto industry in his state if done responsibly.