Israel’s Diamond Exchange is to issue a digital token backed by diamond reserves for trading the precious gems, Eli Avidar, the Managing Director of the Israel Diamond Institute said Monday during a debate on regulation of cryptocurrencies at the Knesset Finance Committee.

“There is massive potential in Israel in everything that has to do with the field of cryptocurrencies, but we’re losing that potential,” Avidar told the committee. The Israel Diamond Exchange will issue a digital currency for the diamond sector that will render the need for cash obsolete. It will be a digital currency in which every transaction will be recognized and backed by diamond purchases.”

MK Yitzhak Herzog, who initiated the debate said “Israel must address cryptographic, virtual and digital coins.”

“The Bank of Israel appointed a committee to address the issue in 2014, but it hasn’t amounted to anything,” Herzog added.

The current state of Bitcoin and other crypto-related assets in the eyes of Israeli regulators is that they are not considered currency, but rather as assets, and are taxed as such. A major portion of the discussion was dedicated to whether or not they should be considered currency as opposed to taxable securities.

Let it be clear, the Financial Committee began dealing with this issue and we’re demanding that the regulators speed up their efforts to formulate a position on the matter,’ said chairman of the committee MK Moshe Gafni, ‘There may be large scale economic potential here. In any case, the train already left the station and a fast position formulation process is needed.’