Israel warns nationals against trading virtual currency

Jerusalem, Feb 20: Israeli authorities warned citizens Wednesday that trading digital currency — Bitcoin — might be risky, saying they were considering regulating its use, Xinhua reported.

The transactions in Bitcoin, a decentralised open source electronic money network, which uses cryptography to secure transactions, are conducted directly via peer-to- peer networks, using anonymous transfers, which in many cases evade the need to use centralized financial institutions.

Although no government has endorsed it, the Bitcoin is becoming increasingly popular around the world. Last year, its exchange rate jumped by 700 per cent within three months to reach more than $1,200 by last December.

This week, Israel’s central bank governor Karnit Flug held a meeting with regulators of the capital and insurance markets, Tax Authority, and the Israel Money Laundering and Terror Financing Prohibition Authority.

“It was agreed to continue to examine various perspectives related to the use of, and trade in, virtual currencies,” a joint statement said Wednesday.

“These perspectives include possible macro affects, their legal standing, their regulation, money laundering and terror financing risks, taxation, and consumer protection,” they added.

The central bank said the Israeli public should “be aware of the unique risks inherent in their use, and to display heightened awareness and caution”.

Authorities in the US, Canada, and the EU have published similar warnings to the public.

In addition, the central bank said that the high volatility of the Bitcoin means its value can increase sharply over a specific period, but it is also liable to sharply decline rapidly, as has already happened.