The chairman of the Israel Securities Authority joins the bandwagon of critics calling bitcoin a ‘bubble’.
Speaking at a public address on Monday, Israel Securities Authority (ISA) chairman Prof. Shmuel Hauser became the latest global financial figure in authority attempting to dampen the frenzied interest surrounding bitcoin, the world’s first cryptocurrency. The official likened the sweeping demand for bitcoin – now among both retail and institutional investors – to the 19-century gold rush.
In quotes reported by Israeli publication Haaretz, the securities regulator said:
[Bitcoin] looks like a bubble, smells like a bubble, behaves like a bubble and feels like a bubble, which explains the increase from $2,000 to $11,000 in a few months – and then suddenly a 20% drop. The chase after bitcoin reminds me of the 19-century gold rush.
To further underline his ‘bubble’ remark, Hauser addressed the growth of the entire cryptocurrency sector, up from $17.7 billion to $350 billion today.
The official also sought to differentiate between bitcoin, blockchain technology and initial coin offerings (ICOs). Blockchain, he said, is a “legitimate technology that will be a part of our lives”.
Despite his dismissive stance of bitcoin, the regulatory chief called for Israeli authorities to take a “friendly” regulatory approach to ICOs, a popular and radical new form of fundraising powered by cryptocurrencies like bitcoin and ethereum.
In related news, bitcoin adopters in Israel now see capital gains tax levied on profits after the Israel Tax Authority deemed digital currencies as intangible assets rather than foreign currencies. Israel’s capital gains tax rate begins at 25%.
Announced earlier this year, the Israel Tax Authority wrote in a published statement:
[Bitcoin] will be considered in accordance with the Income Tax Ordinance as “assets” and their sale will be taxed as a sale of “property.” Income from their sale will be classified as capital income and capital gains will be taxed according to fixed tax rates.