Israeli Securities Regulator Releases Report Aimed At Improving Crypto Sector Via Enhanced Regulation


Israeli regulators are looking to have a cryptocurrency platform in place that will ensure the crypto industry is well regulated even as local firms seek new ways of raising investment capital.

The move follows recommendations from a committee of the Israel Securities Authority (ISA), the country’s securities market regulator, according to a March 7 report published by local news outlet Globes.

The committee, formed in 2017 to come up with crypto regulations for the country, has reportedly handed its final report to ISA chairperson Anat Guetta.

The ISA boss noted that these regulations, when adopted, will help firms in the crypto sector as well as offer protection to investors.

Guetta also noted that the recommendations hinge on the fact that even though the 2017 excitement that characterized the crypto industry has “cooled,” cryptocurrency and the underlying blockchain technology are “here to stay.”

Per the documents, the securities committee has recommended the imposition of disclosure requirements that will apply to crypto offerings that fall under the country’s Securities Laws.

With such offerings likely to qualify as securities, the committee recommends that they be subject to same laws as applies to other crowdfunding methods.

The agency’s final report has proposed a number of ways that would see the sector supported and regulated properly, including the creation of a regulatory sandbox and a crypto trading platform that adheres to the set regulations.

According to ISA, the committee’s recommendations are pivotal as they include a proposed “adjustment” to the existing regulatory guidelines, a move that will help create an enhanced regulatory framework for the industry to cope with potential risks in the crypto market.

The committee’s main recommendation, therefore, involves the need to apply the Securities Law to blockchain-based public offerings and the subsequent trading in these tokens.

The Israeli market has seen the total amounts of money being raised by local companies fall considerably over the last decade; an eventuality that Reuters said has led the securities regulator to seek to attract crypto investors to the market to boost the initial public offering (IPO) market.

The chairperson of the Israel Bitcoin Association Meni Rosenfeld said that ISA’s recommendations would help close “loopholes” that allowed some security tokens to masquerade as utility tokens.

The move is likely to see many companies seek to launch security token offerings (STOs), which some have said is going to be the next ‘big thing’ in crypto fundraising.

Israel could join the likes of Malta and Switzerland as countries that have over the last two years, put in measures to support blockchain and crypto innovation via robust regulatory guidelines.

Meanwhile, Israel has in the past considered having its central bank issue a digital currency and in 2018, Bank of Israel formally requested for information on the use of DLT.

However, a study group set up to explore the feasibility of Israel launching an e-shekel recommended that the country’s top bank should not proceed with plans to launch a central bank digital currency (CBDC).

Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.

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