Bitcoin, the world’s most popular cryptocurrency, is trading at a record high of more than $92,600 per unit after surpassing the $90,000 mark for the first time on Wednesday.
This marks a meteoric rise of over 30% in just over a week — from around $68,000 last Tuesday, the eve of the U.S. presidential elections.
Israeli Crypto Companies Forum CEO Nir Hirschmann talked with Ynet on Wednesday and discussed the reasons behind the dramatic price increases and digital currency taxation. "Since [Donald] Trump was elected, we know the crypto industry can breathe a bit easier,” he said.
According to him, "Trump attended the 2024 Bitcoin Conference in Nashville on the campaign trail and said he intends to uphold the right to hold and mine digital currencies. This has raised expectations."
Hirschmann noted that "what was holding back the market was actually the approach of U.S. regulators. We saw the U.S. Securities and Exchange Commission taking a relatively tough stance — suing Coinbase (a crypto trading company) and Kraken (a crypto exchange), both very large companies. There was regulatory uncertainty around the issue."
“Recently, many American customers were blocked and couldn’t access the market even if companies issued coins and conducted what’s known as airdrops — meaning distributing digital coins to people,” Hirschmann explained. “Now, as we know that American regulators are likely to ease up and let this market grow and develop in the United States, hopes are high.”
He also spoke about how Israel approaches the subject. “We see a similar trend in Israel. Currently, there are 174 companies operating in this field with 3,800 employees, having raised $3.5 billion. The Israeli technology is remarkable, building the infrastructure that underpins the crypto world.”
Discussing taxation, Hirschmann said that in Israel, “there hasn’t been any significant change for small investors. Years ago, the Israeli regulator said that Bitcoin isn’t considered currency in Israel.”
According to Hirschmann, “Now this is simply being formalized in legislation instead of court rulings. This legislative memorandum introduces a definition explaining that a foreign investor in an Israeli company won’t face double taxation, meaning they won’t be taxed in both their home country and Israel. It’s a little complex, but this ultimately provides much more certainty for foreign investors looking to invest in an Israeli company.”
“There’s still a lot to improve, but with the supportive momentum from the U.S., we foresee great developments not only globally but also in Israel,” he added.
According to a legislative document from the Israel Tax Authority and the Chief Economist’s office, a digital asset will be recognized as an asset in Israel and profits from it will be taxed as capital gains.
This seemingly minor yet significant clarification provides crypto and NFT owners with clarity regarding their tax reporting obligations. The memo also specifies when profits from a digital asset will be considered as earned in Israel — if the seller was an Israeli resident at the time of purchase.
According to a state comptroller’s report, the missed annual tax potential from this market in Israel is estimated at up to NIS 3 billion ($799 million). However, only 500 people in Israel reported crypto taxes between 2018 and 2022, compared to the comptroller’s estimated potential of about 200,000.
Hirschmann also warned about crypto investments, saying, “We must always remember that what rises fast can fall fast and it’s crucial to follow the Israeli Bitcoin Association’s advice: don’t invest more than you can afford to lose.” He added, “Just as Bitcoin can rise by tens of percent in a day, it can also drop by tens of percent, leading to potential losses.”
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