The proposal is open for public comment until February 12 and could take effect after six months.
The Israel Securities Authority (ISA) could amend three of its existing currency laws to squeeze in cryptocurrencies.
The regulator’s proposals seek to grant investors maximum security when it comes to digital assets, recalling the recent collapse of FTX and the severe losses it caused to consumers.
Paying Attention to Cryptocurrencies
Israel’s financial watchdog has proposed that cryptocurrencies be included in the nation’s existing securities legislation. As such, the regulator will directly supervise bitcoin and altcoin trading. It will also place the asset class in the “financial instruments” category, where securities, trading, and joint investments are also found.
The potential amendment is intended to provide Israeli crypto participants with additional protection, as well as to underline the technological advancement of the sector.
“Cryptocurrency is a digital representation of value used for financial investment purposes and can be transferred and stored electronically through the use of distributed ledger or other technology,” the ISA stated.
The regulator believes that embracing the crypto industry could positively affect Israel’s economy because it could trigger the flow of diverse capital.
“Advanced technology in these assets can drive economic efficiency in many areas, reduce costs, save the need for intermediaries, and optimize the way information is transferred between entities,” the proposal reads.
The ISA added that cryptocurrencies have become a predominant niche in the Mediterranean nation, with more than 200,000 Israelis exposed to the market, and around 150 companies operating in the field.
Reminder about FTX and Celsius
The ISA believes that global regulators failed to impose relevant rules on the cryptocurrency industry last year, leading to the demise of many companies, such as FTX and Celsius Network. It also noted that the Founder of the latter is Alex Mashinsky, who is of Israeli origin.
Celsius suspended withdrawals, redemptions, and transfers between accounts in June last year, citing “extreme market conditions.” The company raised hopes that the move would stabilize its liquidity.
On the contrary, the problems for the former crypto giant continued and it had to cut 150 of its total workforce in July. It filed for Chapter 11 bankruptcy protection a week later, while CEO Mashinsky resigned from his position in September. The company came close to signing an acquisition deal with FTX, but the latter’s undoing wiped out those plans.
Celsius recently extended the deadline for customers to file their claims to January 10 (at least). Regarded as one of the leading firms in the crypto lending space, it had 1.7 million customers as of early last summer. Some of its creditors include bankrupt Alameda Research and Pharos USD Fund SP.
By Audy Castaneda
