Israel is home to some of the highest profile ICOs around, including Sirin Labs, whose blockbuster ICO smashed its $75 million target, bringing in a total of $157 million, all with a little help from Lionel Messi.
Quite how the country deals with ICOs and cryptocurrencies has been debated at all levels. Shmuel Hauser, head of the Israeli Securities Authority, has announced that all cryptocurrency companies will be excluded from the Tel Aviv Stock Exchange for two years to ensure stability.
Cryptocurrencies “could become a central issue”
However, legislators in the Knesset, the Israeli parliament, are waking up to the new sector’s potential. Moshe Gafni, who chairs the Knesset’s Finance Committee has given regulators 45 days to come up with recommendations on how the country should best proceed, even inviting representatives of cryptocurrencies like bitcoin and ethereum to come make their case.
Though he admitted that cryptocurrencies are “a phenomenon that might be cast aside”, he added that it “might also very well gain momentum and become a central issue in our financial lives”.
Among the first to deliver feedback is the Israeli Tax Authority (ITA) who distributed a circular today with initial proposals on how to deal with ICOs.
The biggest development is that in common with the SEC, Israeli authorities have come down on the side of tokens as assets not securities. As such, any gains their value would be subject to capital gains tax.
Under the proposals ICOs are divided into two types: service transactions and sales transactions. They will also be subject to value-added tax. If an ICO raises more than 15 million shekels (around $430,000 at current exchange rates) it will have to submit to increased accounting requirements.
The ITA stress that these proposals have not been finalized. There follows a public consultation period of two weeks.