The local crypto market could be severely impacted by proposed rules in Israel that would classify cryptocurrencies as securities.
The current situation for crypto in Israel is "quite complicated".
The current plan is to have digital assets supervised by the Israel Securities Authority (ISA), the country's securities regulator.
The ISA is searching for the authority to regulate the cryptocurrency industry.
Regulator's planned definition change will seriously affect the local cryptocurrency market.
Proposed laws in Israel that would classify cryptocurrencies as securities could have a devastating impact on the local crypto industry, according to Ilan Sterk, the CEO of Altshuler Shaham Horizon. The Tel Aviv-based firm which provides cryptocurrency custody and trading services and is one of the few companies in the country approved to work with banks.
Sterk said the current situation in Israel for crypto is "quite complex". And He also explained that the present proposal is to have digital assets under the supervision of the Israel Securities Authority (ISA), the nation's securities regulator.
"Classifying digital assets as securities are going to change the Israeli crypto industry," said Sterk. "However, he was not convinced that the current proposal would be enacted as is, noting that it could be detrimental to the industry if all digital assets were classified as securities. and added :
"You can't classify all digital assets as securities because that would destroy the market,"
In early January, the ISA released a proposal that would give the regulator unparalleled powers to regulate the Israeli crypto industry. The proposal seeks to change the definition of securities to include “digital assets” used for financial investment, which it defines as a digital “representation” of value or rights used for financial investment."
The ISA is searching for the authority to regulate the cryptocurrency industry, to establish standards for intermediaries and issuers, and impose penalties for non-compliance.To ensure transparency, the ISA has proposed that issuers of digital assets must publish a prospectus-like document prior to issuing or registering digital assets for trading.
The general public has until February 12 to submit thoughts and feedback on the matter. In November of last year, the Ministry of Finance released its recommendations for cryptocurrency regulations.
One of the suggestions would permit crypto service providers to operate in Israel, at least temporarily, if they acquired a parallel license from another country. The plan, according to Sterk, would "make some lives a little bit easier" for foreign cryptocurrency exchanges operating in Israel, where obtaining a license "may take up to two, three, or four years."
The latest figures from the ISA estimate that there are around 150 companies operating in the local crypto industry, with more than 200,000 Israelis have invested in cryptocurrencies.
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