Israel: A Friendly Blockchain Hub, but Is Government Policy Lacking?

While difficult to pin down exact statistics regarding how many companies are currently operational in the space, estimates from 2018 compiled by the Israel Blockchain Association put the figure at over 200 companies.

"A major part of why Israel has been known as the startup nation is because of our cyber and fintech technologies, which are also connected to our army intelligence service. In a way, I think that Blockchain and crypto are weaved technologies with fintech and cyber. Their core is to protect value, prevent attacks, and deliver a better financial system."

In addition to high-profile projects, a component of Israel's advances in the blockchain arena is support from the government itself, vis-à-vis regulation and legal judgments.

Still, despite the progress in this area and even regulatory support from the Israel Securities Authority for a local security token issuance platform, the absence of a more proactive government approach to cryptocurrency and blockchain is causing headaches among the entrepreneurial community.

Blockchain growth no match for government bureaucracyDespite Israel being a promising destination for crypto capital, bureaucracy remains a major impediment stymieing businesses and investors alike.

Layers of bureaucracy, complicated taxation and more make Israel one of the least friendly places to do business.

"Anyone that has undergone the bureaucracy channels in Israel knows that there is plentiful waste of time and money. Therefore, blockchain technology can potentially reshape the services civilians and businesses receive in Israel. However, I expect strong headwinds from powerful workers' unions in Israel that view any small change as a threat, not to mention a technology that could make things substantially more efficient. Sadly, bureaucracy will probably be the last adopter of this technology."

Another area is enforcing contracts, for which Israel again ranks 90th.Due to its cold relations with neighboring countries, one could assume the Israeli government would readily and eagerly facilitate the export economy and trade, but that is not the case.

Though the same report cited Israel for progress in the areas of information transparency and administrative efficiency during 2017 and 2018, the difficult regulatory environment for the country's budding fintech and blockchain operations is anything but efficient or transparent.

The Israel Bitcoin Association is petitioning the court to have the Bank of Israel disclose its reasons for refusing transactions, but this is likely to be a drawn-out battle for transparency.