The Israeli Securities Authority proposes a framework for regulating the digital assets. According to the regulator, more than 150 Israeli companies are operating in Israel.
In January 2023, the regulator issued a proposal. outlining its purpose to achieve the “double value” of responding to the risks associated with investing in digital assets alongside giving the authority means to adopt a regulation.
The authority has established multiple committees over the past several years to examine and regulate the issuance of cryptocurrencies and promote the development of digital markets in Israel.
The latest committee was tasked with examining the authority’s policy on investment products in digital assets.
An amendment to the definition of the term “securities” to include “digital assets” used for financial investment was also included in the proposal.
It was further added that the definition of “digital assets” as a digital “representation” of value or rights used for financial investment.
This authority seeks to have oversight powers over the digital asset industry. It will include setting requirements for issuers, intermediaries, and imposing penalties for non-compliance.
Public comment on the document is now allowed until February 12. The document also seeks to require issuers digital assets to publish a prospectus before issuance or registration.
Investor protection is prioritized. This means that intermediaries in digital asset industries must adhere to the same rules as those used in traditional securities industry intermediaries, including the requirement to have a license and meet capital requirements.
There are also areas to be addressed, such as smart contracts and tokens that can have multiple functions.
This regulator is designed to promote the growth of Israel’s digital asset industry by allowing the establishment of digital exchanges and allowing the use of digital assets for collateral.
There are risks associated with digital assets, including fraud and market manipulation. The authority was also empowered to intervene in cases suspected of wrongdoing.
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This comes after Israel’s chief economist Shira Greenberg laid out a list of recommendations to policymakers on how they should tackle digital asset laws and drive-up crypto adoption.
A 109-page report submitted Greenberg, a Minister of Finance, requested a more comprehensive regulatory structure that would bring together trading platforms and cryptocurrency issuers. It would also give regulators more power to monitor the industry.