Israel’s Securities Regulator Proposes Crypto Legal Framework

  • ISA is looking to squeeze digital assets into already existing securities laws, which would allow it to treat them as financial investments.
  • Another proposal will define crypto as “digital representations” of value that are used for financial investment that can be transferred using a distributed ledger.
The national flag of Israel

The national flag of Israel. Shutterstock

The Israel Securities Authority (ISA) has proposed a regulatory framework that would provide greater clarity around digital assets, and place them largely under its authority, the financial regulator said on 4 January.

According to the proposal, the regulator is looking to squeeze digital assets into already existing financial laws and expand the definition of securities in order to respond to the risks associated with investing in digitl assets. ISA noted that it kept in mind that the regulations must be flexible so they could react to the constant changes in the digital asset technology.

ISA is looking to include “digital assets” into already existing securities regulations, which would allow it to treat most cryptocurrencies as financial investments. The change would define crypto as “digital representations” of value that are used for financial investment that can be transferred using a distributed ledger, and place it under the regulatory authority of ISA.

The agency noted that while existing securities laws can already regulate crypto actovoty to some extent, they can be difficult to apply some times as currently written. As such, ISA is also seeking power to oversee the digital asset industry by setting requirements for crypto issuers and intermediaries, and imposing sanctions for non-compliance. The document will be opened for public comment until 12 February.

Israel’s securities regulator added in the proposal that it aims to facilitate the development of the digital asset industry in the country by enabling the use of digital assets as collateral and allowing for the establishment of crypto exchanges. The agency said it had seen an opportunity in crypto for the Israeli economy, noting that more than 200,000 Israelis had bought crypto and that around 150 crypto firms were operating in the country.

Related Coverage
DoJ Says Lack of U.S. Crypto Laws Irrelevant in SBF Lawsuit
  • Sam Bankman-Fried’s legal counsel had claimed he should not be charged with any crimes involving FTX as it was not regulated in the U.S., only FTX.US was.
  • The DoJ said the claim was irrelevant as SBF was charged for violating existing laws for misappropriating customer assets.
October 4, 2023, 12:18 PM

Former CEO of FTX Sam Bankman-Fried leaves the Federal Court in New York after pleading not guilty, 3 January, 2022.
lev radin/Shutterstock

SEC Staff Asked Coinbase to Delist all Crypto Except BTC Before Lawsuit
  • During an interview with FT, CEO Brian Armstrong said that before the lawsuit a SEC staff member had said that all crypto except BTC was security, and should be delisted.
  • When asked how he came to that conclusion, the SEC staff member reportedly said “we’re not going to explain it to you, you need to delist every asset other that Bitcoin”.
U.K. Regulator Shut Down 26 Crypto ATMs Since Start of 2023
  • The U.K. Financial Conduct Authority continues its crackdown on crypto ATMs in the country, and has disrupted a total of 26 machines since the start of the year.
  • The regulator warned the public back in March 2022 that all crypto ATMs in the country were operating illegally, and issued a “shut down or face further action” order.