Bitcoin is a digital asset and a payment system invented by Satoshi Nakamoto. Transactions are verified by network nodes through cryptography and recorded in a public dispersed ledger called a blockchain.
Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.
As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.
Israel has been slow to warm up to Bitcoin and other cryptocurrencies. The Israel Tax Authority (ITA) has not yet issued any guidance on the tax treatment of cryptocurrencies.
However, the ITA did issue a statement in December 2017 indicating that cryptocurrencies are not considered legal tender in Israel.
This means that cryptocurrencies are not subject to the same regulations as other financial instruments in Israel. For example, there is no obligation to obtain a license from the Bank of Israel to operate a cryptocurrency exchange.
However, this does not mean that cryptocurrencies are completely unregulated in Israel. In September 2017, the Israeli Securities Authority (ISA) published draft regulations for Initial Coin Offerings (ICOs).
These regulations are currently in consultation and have not yet been finalized.
Under the proposed regulations, ICOs would be subject to securities lAWS and would need to be registered with the ISA. The ISA has also indicated that it is looking into regulating cryptocurrency trading platforms as securities exchanges.
At present, there is no specific regulation of cryptocurrencies in Israel. However, this may change in the future as various authorities continue to monitor developments in this area.