Israel prime minister Benjamin Netanyahu reportedly wanted to work out a new military aid package while president Barack Obama was still in office. Getty Images

Israeli news broadcasters are buzzing about unearthed footage of Prime Minister Benjamin Netanyahu speaking off the cuff about bitcoin. “Are banks going to eventually disappear? Yes. The truth is that this is what’s pushing bitcoin prices upwards,” Netanyahu said. He also said banks won’t disappear tomorrow, and that the current state of explosive bitcoin market growth can’t last forever. However, in the long term, it appears the Israeli leader believes technologies like bitcoin will supplant centralized institutions. He told reporters banks traditionally establish trust while protecting people against risk. Those days, in his opinion, are numbered.

Much like Silicon Valley, a cryptocurrency boom is sweeping the Jewish nation of around 8 million people. Arab Israeli travel vlogger Nuseir Yassin posted a video about buying bitcoin with cash in Tel Aviv on Wednesday and garnered over a million views in less than 12 hours. “We have seen huge growth in awareness in the last few months,” Amitay Molki, co-founder of Blockchain JLM in Jerusalem, told International Business Times. “I know that the Israeli Bitcoin embassy and the regulators are working together to figure out the proper way to address the regulation of bitcoin and cryptocurrencies.”

One of Israel’s two bitcoin ATMs temporarily shut down this week because it was overloaded with too many pending transactions and constant demand. Former chairman of the Israel Securities Authority, Shmuel Hauser, said this “out of control” bitcoin craze should be examined on a national level by all regulators.

Israeli regulators are still cautious when it comes to cryptocurrency, particularly as they consider initial coin offerings. The Israeli cryptocurrency startup Colu raised $14.5 million this week from Israel's largest holding company as it prepares for a token sale. Before Hauser stepped down a few days ago, Haaretz reported his announcement that regulators will take a “friendly” approach to ICOs, aiming to foster growth while curbing scams.

“We need to distinguish between blockchain [technology], bitcoin and initial coin offerings," Hauser said. "Blockchain is a legitimate technology that will be a part of our lives.” All the largest Israeli banks are exploring blockchain technology on some level, although Bank Leumi has reportedly blocked credit card payments to the bitcoin purchasing service Coinmama. Israeli banks are wary of working with cryptocurrency until a clear legal framework offers them protective guidance.

Molki expects regulators will have an announcement about bitcoin tax reform within a month or so. Israeli lawmakers are widely supportive of blockchain technology, even as they debate how to classify different cryptocurrencies. “The Israeli Bitcoin embassy is fighting to define bitcoin as a currency, that would be the best case scenario because in Israel you don't pay taxes for converting currencies,” Molki said. “But if bitcoin would be defined as a property, as in the regulators’ initial draft, we would have very high property tax.”

The Israeli blockchain industry is booming, fitting naturally into the country’s world-renown fintech scene. But Hauser warned the Tel Aviv Stock Exchange not to list bitcoin companies until lawmakers establish a “suitable regulatory framework.” This move was based on wild volatilely impacting the TASE. For example, stocks for the online gaming company Fantasy Network Ltd. immediately surged almost 400 percent when it announced plans to recruit local blockchain experts. Israeli leaders are curious about cryptocurrency yet eager to keep rapid adoption from disrupting the broader economy.