By George Ward
The Israeli Securities Authority (ISA) has published its proposed framework for regulating digital assets. According to the ISA, the regulation became necessary as more Israelis explored the crypto sector. Moreover, over 150 crypto-based firms are operating in Israel currently.
Israel’s Regulator Unveil Crypto Regulatory Proposal
The regulator’s proposal outlined its plans to handle the risks associated with crypto asset investments. The ISA proposal has been in the works for years, with the regulator forming several committees during this period.
These committees aim to investigate and oversee the issuance of digital currencies and encourage the growth of Israel’s digital sector. The job of the latest committee was to examine the policy of the ISA regarding investment products in the crypto sector.
Notably, the latest proposal contains an amendment to the meaning of “securities.” According to the proposal, the term “digital assets” should be included in “securities.” The document also asked for expanding the concept of “digital assets” to include any digital “representation” of rights or value utilized in financial investment.
In addition, the ISA asked for more powers to regulate the crypto sector. This includes the capability to set criteria for intermediaries and crypto issuers and sanction non-compliant entities.
Meanwhile, the proposal is currently open for public comments till February 12th. In addition, the document intends to introduce a requirement for crypto issuers.
Crypto issuers will have to publish a prospectus before the issuance or registration of the assets is made available to the public.
The Establishment Of Crypto Exchanges
Investor protection is also another part of the new proposal. Intermediaries in the crypto sector are to follow the rules similar to the ones guiding intermediaries in the conventional securities sector.
Examples of such rules include having a license and meeting specific capital standards. The proposal also addressed the characteristics of digital assets, like the ability of tokens to serve multiple functions and the usage of smart contracts.
Interestingly, the watchdog will allow the establishment of crypto exchanges in Israel. Furthermore, it will enable the usage of crypto assets as collateral.
The purpose is to enhance the growth of crypto in Israel by giving the crypto industry room to develop. Notably, the framework also addressed the risks linked with digital assets, like the issue of market manipulation and fraud.
ISA’s regulatory framework empowers authorities to have the power to pursue and prosecute such cases. Meanwhile, this news comes after Shira Greenberg, Israel’s chief economist, gave policymakers recommendations on handling crypto asset laws and speeding up crypto adoption.
At the time, Greenberg submitted a 109-page report to the Minister of Finance, calling for a more comprehensive crypto regulatory framework. According to Greenberg, this regulatory framework must bring crypto issuers and trading platforms under the law.
Furthermore, Greenberg clamored that regulators should be given more jurisdiction and power to oversee the crypto sector.