An Israeli judge has ruled that bitcoin (BTC) is an asset and not a currency, local news site Globes reported on May 21.

The judgment is significant because it means profits made by selling the cryptocurrency will now be liable to capital gains tax, Globes notes.

Noam Copel, who founded the blockchain startup DAV, had bought BTC in 2011 and sold two years later — making a profit of $2.9 million at today’s rates.

During the court case, he had argued that bitcoin should be regarded as a foreign currency, as fluctuations in exchange rates are not taxed.

But the Israel Tax Authority (ITA) argued differently, with the organization putting forward the idea that currencies must have some physical manifestation under the country’s laws.

Judge Shmuel Bornstein ruled that Copel had failed to prove that bitcoin met this requirement, or that it could be used as a viable alternative to fiat when he had sold the cryptocurrency six years ago. However, he indicated that the court’s attitude may change — describing his ruling as “for now.”

As things stand, the entrepreneur must now pay tax on $830,000 of the profits he made; however, Copel does have the option of appealing to Israel’s Supreme Court.

The ITA had first outlined plans to tax cryptocurrencies as property in February 2018.

Earlier this month, the United States Internal Revenue Service said it was prioritizing issuing guidance on cryptocurrencies after politicians in Congress warned there is still much ambiguity about how the asset should be taxed.