Israel To Restrict Cash In Order To Boost Digital Payments

Israel is expected to restrict cash in order to boost digital payments, and it will not be the first or last nation to enact such restrictions.

Further restrictions on cash payments were put in place by Israeli authorities on Monday in an effort to deter illegal activity and promote digital payments there.

Under the Law for the Reduction in the Use of Cash, Israeli businesses and consumers have been subject to cash payment restrictions since January 2019. Its goal is to encourage businesses and individuals to use digital payments, which will make it simpler for law enforcement to detect tax evasion, illicit trade, and money laundering.

The cap on cash payments has been reduced as of August 1 to 6,000 Israeli Shekels (NIS), or $1,760 USD for business transactions, and NIS 15,000 ($4,400 USD) for personal transactions.

Further regulations, prohibiting the storage of more than NIS 200,000 shekels ($58,660 USD) in cash at private residences, are anticipated to be implemented in the future.

Some people have interpreted the new restrictions on hard-cash transactions as a positive sign for the country’s potential adoption of cryptocurrencies in the future.

CBDCs & Crypto in Israel – regulation

The country, which first thought about a CBDC at the end of 2017, is also one of several in the region that are investigating central bank digital currencies (CDBCs).

There was strong support for more investigation into CBDCs and how they would affect the payments market, financial and monetary stability, as well as legal and technological issues, according to the Bank of Israel’s responses to a public consultation about its plans for a “digital shekel,” which were made public in May.

The Bank of Israel conducted its first technological experiment with a CBDC in June, revealing the results of a lab study on user privacy and the use of smart contracts in payments.

Additionally, the nation is establishing a legal framework for digital assets. Jonathan Shek of Oz Finance revealed that Israel’s financial authorities had been working on a thorough and all-encompassing regulatory framework for digital assets during this year’s Israel Crypto Conference in May.

Shek hinted that it would happen soon, meaning Israel will restrict cash in the future, though he did not provide a specific date, saying that the Israeli government was eager to support the development of the cryptocurrency industry in their nation if done responsibly.