The Chairman of the regulatory securities authority of Israel joined the group of critics who believe the bitcoin “bubble”.
On Monday, in his speech, the Chairman of the Agency for the securities of Israel (ISA), Professor Shmuel Hauser, one of the last global financial players in power have tried to mute the frenzied interest in bitcoins – the world’s first cryptocurrency. The official drew an analogy between the broad demand for bitcoin (among retail and institutional investors) and the gold rush of the nineteenth century.
Israeli publication Haaretz quoted the regulator:
“Bitcoin looks like a bubble smells like a bubble, behaves like a bubble and like a bubble, and this explains the increase from 2000 to 11000 dollars for a few months and then a sudden drop to 20%. Pursuit of bitcoin reminds me of the gold rush of the nineteenth century.”
To reiterate my comment regarding the bubble, Hauser pointed to the growth of the entire cryptocurrency sector from 17.7 to $ 350 billion.
The official also held the distinction between bitcoin, blockchain-technology and primary offerings of coins (ICO). According to him, the blockchain is “legal technology, which will become part of our lives.”
Despite his dismissive attitude toward bitcoin, the head of the regulatory authority called on the Israeli authorities to apply a liberal approach to the ICO’s popular and innovative form of fundraising used by cryptocurrencies like bitcoin and Ethereum.
Users of bitcoin in Israel faced a tax on capital gains from profits, after the Israeli IRS has defined digital currencies as intangible assets, not foreign currency. The tax rate on capital gains in Israel starts with 25%.
In an official statement by the Israeli tax administration stated:
“Bitcoins will be treated in accordance with the Law on tax on income as “assets” and their sale would be taxed as a sale of “property.” Income from their sale would be classified as capital income and will be taxed at fixed rates”.