Israel’s Financial Watchdog Propose Amendments To Securities Law To Regulate Cryptocurrencies 

Israel’s Financial Watchdog Propose Amendments To Securities Law

Israel’s securities authority, ISA, has published a recommendation paper proposing amendments to the country’s current securities law to incorporate cryptocurrencies. The ISA considers crypto assets as financial investment products with virtual representations of value. 

The Israel Securities Authority (ISA) has published a consultation paper seeking to make amendments to the country’s existing securities laws to bring regulations that apply to cryptocurrencies. The securities watchdog argues that crypto assets are virtual representations of value that fall under the category of financial instruments, which the government body oversees. 

While crypto assets are similar to traditional securities and often serve as financial investment products, they cannot be defined as such under existing laws due to their specifics, says the ISA. Although current laws do regulate some crypto-related activities in the country, like registration of crypto service providers, they do not cover all aspects of the digital assets. The regulator says its proposed amendments are aimed at protecting investors while also allowing for the unique advantages of cryptocurrencies to thrive. 

The text published on January 4, is open for feedback from the public until February 12. If passed by the country’s parliament, the bill is expected to become law within a six-month transition period. The ISA also noted that the rules must be flexible to adapt to various changes brought forward by the blockchain technology that underpins cryptocurrencies.

Israel’s Financial Watchdog Propose Amendments

In November 2022, Israel’s Ministry of Finance recommended updating the country’s securities laws so that it could incorporate cryptocurrencies to better regulate the sector. This came in light of the recent events that plagued the global crypto market, like the insolvency of major industry players like FTX and Celsius, with the latter having significant operations in Israel. 

At present, companies that want to provide crypto-related services in Israel must obtain an operational licence from the ISA and the Capital Markets, Insurance and Saving Authority (CMISA). Last year, Israeli crypto exchange Bits of Gold, and blockchain infrastructure firm Hybrid Bridge Holdings, became the first companies to be granted the licence by the country’s financial regulators. Israel used to maintain an anti-crypto stance up until 2019, when the government out right banned the instruments claiming their decentralised nature made it difficult to comply with the country’s anti-money laundering (AML) regulations. 

Israel is currently working on releasing a central bank issued digital currency (CBDC), which is being developed under the guidance of the Bank of International Settlements (BIS). Project Icebreaker, as it is dubbed, is a program undertaken by the BIS Innovation Hub Nordic Centre in a collaboration with the Bank of Israel, Central Bank of Norway and Sveriges Riksbank of Sweden. The project is conducting a study on how to effectively replace existing cross-border settlement systems which are affected by “high costs, low speeds, limited access and insufficient transparency” with a blockchain-based system that will utilise CBDCs for transactions. 

Project Icebreaker will develop a proof-of-concept to enable cross-border retail and remittance payments using digital currencies at a faster and cheaper rate. A final report on the study will be published by the central bank in the first quarter of 2023.  

Also Check: TON Blockchain Unveils Decentralised File-Storage Solution 

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