Legislators in Israel conducted preliminary reading for a new bill that proposes the exemption of foreigners from capital gains taxes or profit made from their cryptocurrency activities.

The bill, which seeks the amendment of Israel’s Income Tax Ordinance, also prescribes cutting the 50% tax on employees’ crypto options by half. The goal in this regard is to extend the tax benefit enjoyed by workers in the traditional high-tech industry to the digital asset industry.

Israeli Eyes Change to Crypto Tax Rules

Dan Illou, a lawmaker in Prime Minister Benjamin Netanyahu’s Likud party, noted in a statement that the bill has the backing of the coalition government led by Netanyahu. The bill also fits into the current administration’s plans to attract foreign investment to Israel, CoinDesk quoted Illou as saying in a statement.

The latest development comes as Israel seeks to regulate the emerging digital assets industry. In November, Shira Greenberg, the Chief Economist at the Israeli Ministry of Finance put forward recommendations for regulating the country’s digital asset market, including by creating mechanisms for tax payment on digital asset activities [in order to remove barriers and increase certainty.]

“Regulatory processes are being formulated and determined during this period in various countries in the Western world, and it is recommended that the State of Israel act in accordance with the standards emerging in the developed world,” Greenberg stated in a statement.

Earlier this year, the Israel Securities Authority (ISA) also published a proposal seeking to amend the applicability of the Western Asia nation’s securities laws to crypto and digital assets. In addition, the Bank of Israel recently proposed rules for permitting stablecoin use in the country while managing risks and protecting investors.

Crypto Regulation in Israel

In the last five years, Israel has created three committees to look into various areas of crypto regulation and adoption in the country, Finance Magnates reported. The third committee, which was established in May 2021, sought to assess the ISA’s policy with regard to investment products in digital assets.

While Israel continues to work on formulating regulations for its crypto industry, public authorities in the country actively counter the use of digital currencies for crimes. Recently, Israeli authorities seized millions of dollars in crypto allegedly linked to groups in Iran and Lebanon. In a separate action, it confiscated 189 Binance accounts reportedly linked to Palestinian and Islamist terror groups.

Meanwhile, Israeli, like major countries across the world, is also considering the launch of a central bank digital currency (CBDC). However, the country has tied the launch of its CBDC, the digital shekel, to similar moves in other jurisdictions, especially in the United States and the European Union.