The regulatory body in Israel responsible for the oversight of the securities market is taking steps for developing rules applicable to digital assets that would be incorporated into the country’s existing legislation.
A draft proposal was released by the regulatory authority for introducing the changes that would be used for defining the legal status of crypto in Israel.
The Israel Securities Authority (ISA) has stated that since crypto assets are often used by people for investment purposes, it is essential to place them under oversight through the regulatory framework.
Therefore, the regulator has suggested that amendments be introduced to the legislation in the country related to this field.
The purpose of the proposal is to make changes to the existing law applicable to securities in order to apply them to digital assets as well.
According to the new provisions that have been put forward, cryptocurrencies have been defined as virtual representations of value, which are categorized as financial instruments.
This would put them under the oversight of the ISA. The authority has presented the logic that cryptocurrencies are quite similar to traditional securities in a number of ways.
However, even though these digital assets are often used for making financial investments, they are not defined under the current law or included in them.
Therefore, it means that the rules may not apply to them in some cases because of their specifics. Another major goal of the ISA is to provide investors with adequate protection and also regulate the crypto industry.
The rules will cover all cryptocurrencies that are offered as securities, regardless of whether they are listed and traded on the stock exchange or not.
In addition, they will also apply to ‘foreign securities’ that are offered to Israelis.
The ISA published the document containing the amendments on Wednesday and it will remain open for comments and feedback from the public until mid-February.
Once the new rules have received approval, they will be put into effect in six months and this will enable a gradual transition.
The initiatives from the securities watchdog come after the Ministry of Finance in the country issued recommendations in November 2022 for updating the securities laws of Israel.
The purpose is to deal with the different risks that are involved with crypto assets. The chief economist of the department had sent a report with the recommendations.
It highlighted the importance of introducing proper crypto regulations that would address all the relevant aspects.
It is not surprising that the ISA has picked up its pace when it comes to developing regulations applicable to the crypto space.
A number of regulatory bodies in different countries around the world have also taken similar steps after the FTX fiasco that occurred in November last year.
The need for providing clarity to those operating in the market has become evident as well as that of providing protection to the participants.
Regulatory bodies have spurred into action to ensure such incidents do not happen again.