Crypto reacts to cash limit law that could ‘turn 10% of Israelis into criminals’

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Israel’s cash payment limit has been capped later Monday in a bid to crack down on crime and move to digital payments – but critics say it won’t be effective.

Starting today, payments to businesses will be limited to $1,700 in cash. For trade between non-commercial entities, such as two citizens, the cap is now $4,360 (6,000 and 15,000 Israeli shekels, respectively). Initially, commercial cash payments were limited to just 11,000 shekels, or $3,200.

Citizens are encouraged to use digital transfers or debit cards instead, which are exempt from these caps.

Government says Israel’s cash limit will help fight against organized crime, tax evasion and money laundering. Israel Tax Authority officials Told The Media Line: “The goal is to reduce the fluidity of cash in the marketplace, primarily because criminal organizations tend to rely on cash. By limiting its use, criminal activity is much more difficult to carry out.

There are exceptions to Israeli cash limit law. West Bank Palestinians will be allowed to continue using large sums of money for the time being, as long as they report the transactions to the Israel Tax Authority. Charitable institutions will also be exempt.

Read more: Criminals seem to have nine lives when it comes to crypto

Crypto Industry Reacts To Israel’s Cash Limit

Critics argue the law will not have as much impact as expected. Lawyer Uri Goldman, who represented clients who appealed the law, said that when the first phase went into effect, the amount of liquidity in the market increased rather than decreased.

“When the bill was passed, there were over a million citizens without bank accounts in Israel. The law would stop them from doing business and turn practically 10% of the population into criminals,” (via The Media Line).

Crypto enthusiasts are optimistic about the law – banking for the unbanked has always been a key selling point. Despite this, a Chainalyis report from 2022 found that money laundering with crypto had increased by 30% over the previous year – suggesting that a shift from fiat to digital assets is not as crime-reducing as one would hope. UK regulators have also claimed that crypto exchanges are failing to expose money laundering.

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