Israeli Prime Minister (PM) Benjamin Netanyahu, in a video made available Tuesday, suggested that our current banking system is heading toward obsolescence. The cause? The rise of viable cryptocurrencies, like Bitcoin, and their utilization of decentralized ledgers.
In response to a question from a reporter on whether he would advise individuals to invest in Bitcoin, the PM answered “So, first of all, why can’t you also sell money? … The reason you can’t sell money is that you are very worried and want a mediating party to handle the risks. Prevent theft, all that stuff. That’s why banks exists. Are banks certain to eventually disappear? Yes. The answer is yes. Should it happen tomorrow? And should it be done via bitcoin? That is a question. But the truth is that what I just said is what is propelling Bitcoin upward.”
It’s rare to hear such a blunt assessment of the changing nature of global financial structures from a head of state, but Netanyahu has a background particularly relevant to the topic: before holding the position of PM, Netanyahu attended MIT and worked as an economic consultant for the Boston Consulting Group.
Netanyahu echos the beliefs of many in the cryptocurrency world, who have long suggested that blockchain technology, the distributed ledger system upon which cryptocurrencies are built, will eventually cause a major disruption in the banking world. This technology allows transactions between individuals to be valid and secure, without relying on the centralized institutions that the global financial industry is currently built around. The philosophical and practical ramifications of such a shift are not lost on the financial industry.
In a telling juxtaposition with Netanyahu’s remarks, the outgoing ISA Chairman, Prof. Shmuel Hauser, spoke at the Hi-tech Growth and Debt Financing Conference, held at the Tel Aviv Stock Exchange. “I would like to emphasize,” he told the audience, “that we will not allow companies whose values are based on bitcoin values…to be included in TASE indices.” He went further still, elaborating that “We will also consider not allowing trading in ‘back-door’ ‘costumes’ of bitcoins or similar on TASE.”
Interestingly, Hauser had softer language for ICOs: “As for ICOs,” he said, “the story is different…I believe that the issue of issuing digital currencies [ICO tokens] must receive a favorable regulatory approach, perhaps even a courageous one.”
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