"With a digital shekel, payments will be faster, more private, and cheaper"
"A central digital currency is designed to add convenience in the digital space and strengthen existing payment rails, not abolish them," added Soramitsu founder Dr. Makoto Takemiya.
Dr. Makoto Takemiya, founder and CEO of Japanese blockchain technology company Soramitsu:
Israel is a small country with heavy regulation. Why are you choosing to operate here and competing in the tender to develop the digital shekel system?
We chose Israel because of a combination of unique opportunities and strong local partners. The Israeli company Inori represents us in Israel and holds a license to operate in the non-bank credit sector. Indeed, there is overregulation here, but this actually creates enormous potential for improving processes and promoting innovation. Blockchain is an efficient and transparent technology that enables real-time monitoring of payments, ownership transfers, and transaction status from end to end. It shows in real time what stage each payment is at and who owns the asset at any given moment. This transparency simplifies regulatory compliance. Strong startups are already operating in Israel in this field, and we bring a decade of experience in blockchain and payments. Local collaborations create mutual innovation: we upgrade the systems, and Israel benefits from faster, cheaper, and better payment infrastructures.”
Still, it’s a difficult time for Israel’s foreign relations, with other countries scaling back their activities here. Just two weeks ago, the Norwegian sovereign wealth fund, the largest of its kind in the world, sold its holdings in the five largest Israeli banks.
“Personally, I’m a bit of a contrarian investor. Obviously, what you see on TV is not necessarily the real truth. Israel is definitely a kind of beacon in this part of the world. It’s a place with a lot of innovation, with many smart people who have the energy to work hard. I don’t see any reason not to do business here. In fact, I see a lot of opportunities here.”
One of the main activities you want to pursue in Israel is to develop the digital shekel system. What does this involve?
“Blockchain is a kind of shared digital ledger, where anyone on the network can check all transactions and verify that they are genuine, without a single central authority controlling everything. Transactions are securely encrypted to prevent counterfeiting. The digital shekel applies blockchain principles within a formal structure: the money itself is a liability of the Bank of Israel, not a private issuer. Transactions are finalized within seconds and cannot be canceled or reversed unilaterally, just like handing over cash. This reduces fraud, returns, and delays. The model combines blockchain innovation with public accountability and regulation. It is not full decentralization like crypto but a hybrid of innovation, order, and stability. It is similar to cash, but digital and supervised. Unlike private cryptocurrencies such as Bitcoin, the digital shekel is part of the official monetary system, with stability and regulatory oversight.”
What benefits will the digital shekel bring to daily life for Israeli residents?
“Payments will be faster, more private, and cheaper. Simple payments in a café or between individuals will be completed in seconds and will be final, like cash. There will also be a uniform QR code standard across all applications, allowing users to scan with any app for instant payment, without compatibility issues. This simplifies the process for consumers and reduces high fees common in traditional systems. Cross-border payments will also be faster and cheaper, saving both time and money. Unlike credit card transactions, where only a payment request is sent through intermediaries, with digital shekels the money itself moves directly from account to account in seconds. This infrastructure reduces friction, costs, and uncertainty, while enabling easy, instant, low-fee payments, even from abroad.”
And won’t this harm users’ privacy?
“The concern for privacy is legitimate, and the digital shekel system is designed to address it. There will be a clear separation between transaction data and users’ personal information. The Bank of Israel will manage the currency and verify transactions but will not have access to identifying personal data without a court order or legal process. Personal data will remain with commercial banks or payment providers, separate from transaction information. This balance ensures transparency and oversight while preserving user privacy and preventing misuse of data. Similar models have already proven effective elsewhere.”
Is Israel unique in pursuing a digital currency?
“No. Central banks worldwide are exploring central bank digital currencies. Personally, I have met with more than 80 central bank teams.”
You developed the system used by the Central Bank of Cambodia. What did that experience teach you?
“We started in 2017 with a small, closed experiment. In 2019, we expanded it, and in 2020 the system launched nationwide. Adoption takes time because you need to integrate cash registers, apps, and merchants and teach the public how to use it. But once critical mass is reached, everyone joins because ‘everyone is already there’. Cambodia uses a single QR standard nationwide. It doesn’t matter which app you use, bank, payment provider, or otherwise, you scan and pay. It just works.”
What does that look like in numbers today?
“In 2024, the system processed 3.3 times Cambodia’s GDP, more than $150 billion, across about 600 million transactions. In a country of about 17 million people, that’s virtually universal adoption.”
Will the digital shekel replace cash?
“No. Cash will remain an important part of the system, essential for privacy and emergencies. The digital shekel will complement, not replace, cash. A central digital currency is designed to add convenience in the digital space and strengthen existing payment rails, not abolish them.”
And what about private cryptocurrencies like Bitcoin? Can they coexist with a central digital currency?
“Yes. We will see an official digital shekel alongside stablecoins, mainly for cross-border use. Today’s banking system relies on multiple layers of institutions, each issuing its own liabilities, creating fragility. Over time, central digital currencies can simplify the system and reduce risks. But private currencies like Bitcoin are volatile and lack regulatory oversight, making them unsuitable for everyday payments. They function more as speculative assets than stable payment tools.”
You don’t sound like a big fan of Bitcoin.
“Bitcoin is an idea, in the purest sense, a meme. A meme is simply information that spreads through society. Bitcoin has value because people believe in it and trade it. But if you try to define its precise economic value, it’s impossible.
“I am very skeptical about Bitcoin as a currency. It failed in its original mission of being peer-to-peer electronic cash: it’s slow, expensive, and rarely used for daily transactions. Today, it’s more of an investment asset, like gold, a store of value rather than a medium of exchange.
“Bitcoin also has significant technical weaknesses, such as proof of work, which consumes massive electricity and computing resources. So while it may retain speculative value because ‘humans are basically crazy,’ it is unlikely to serve as a practical payment tool in the future.”
You also want to obtain a license for a stablecoin in Israel. What would that be?
“Stablecoins are digital currencies pegged to a central currency at a 1:1 ratio. They offer stability, fast cross-border transfers, and support for e-commerce and innovation. Unlike central bank currencies, they are issued by private entities. Together with a digital shekel, stablecoins would create a dynamic, flexible payments system integrated into the future financial landscape.”
With so many cryptocurrency projects emerging, why do you still focus on central banks?
“Because technology cannot exist in a vacuum, disconnected from society. Real value comes from producing goods, services, knowledge, and innovation that improve lives. That is what cryptocurrencies and blockchain should enable. Private and central currencies serve different purposes, and both will coexist in the future financial system.”
What will payments and digital currencies look like in 20 years? Will central banks still exist?
“Yes. I believe every country will issue its own digital currency, improving efficiency, reducing costs, and giving people fast, secure access to money. Regional digital currencies may also emerge to facilitate trade. AI will be integrated to detect fraud and optimize payments. Digital currencies will ensure competition among payment providers while safeguarding privacy, security, and financial stability.”
