Bank of Israel has stated that digital currencies like bitcoin are more an asset than a currency. Addressing a meeting of the Knesset Finance Committee, Nadine Baudot-Trajtenberg, deputy governor of the bank of Israel, stated:
“Bitcoin and comparable digital currencies aren’t a currency, and aren’t taken into consideration as a foreign currency.”
Defining the bank of Israel’s role within the digital currency environment, she cited that digital currencies have to rather be considered as an economic asset and that bitcoin does not fit the central bank’s legal definition of currency. Baudot-Trajtenberg additionally warned that legitimate bodies like central banks or governments, and those traders don’t subsidize that bitcoin and different digital currencies and customers must be aware about the dangers, such as an excessive level of volatility that could cause unexpected drop in value.
However, noting possible compliance dangers for banks, she persisted to mention that the anonymous nature of digital currencies results in the opportunity of their use in money laundering and economic crimes. Banks, she mentioned, want to take essential measures to fight fraudulent activities concerning digital currencies.
The bank of Israel’s banking supervision department has created an internal group to inspect such dangers, the announcement suggests. However, digital currency technology poses issues for the government in terms of designing policies.
Nadine Baudot-Trajtenberg said:
“Our assessment is that there’s an actual problem in issuing sweeping suggestions to the system concerning the right manner to estimate, control, and monitor the dangers inherent in such activity.”
The new comes a month after Israeli economic watchdog, the Israel Securities Authority, mentioned that it is seeking to prohibit any organization that has a main involvement in bitcoin buying and selling from the Tel Aviv Stock Exchange.
In last months, some of different central banks and economic regulators have issued warnings because the expenses of digital currencies have soared to new all-time highs. Nations such as the United Kingdom, India, Russia and more have currently sounded the alarm over the perceived dangers of making an investment in bitcoin.