The potential changes could come into effect in half a year.
The Israel Securities Authority (ISA) could amend three of its existing monetary laws to squeeze in cryptocurrencies.
The regulator’s proposals seek to grant investors maximum security when dealing with digital assets, reminding about the recent collapse of FTX and the severe losses it caused to consumers.
Paying Attention to Crypto
Israel’s financial watchdog proposed that cryptocurrencies should be included in the nation’s existing securities legislation. As such, the regulator will directly supervise operations with bitcoin and altcoins. It will also put the asset class into the category of “financial instruments,” where securities, marketing, and joint investments are also located.
The potential amendment aims to give Israeli crypto participants additional protection and to underline the sector’s technological advancement.
“Cryptocurrencies are a digital representation of value used for the purpose of financial investment and can be transferred and stored electronically by using distributed ledger technology or another technology,” the ISA stated.
The regulator believes embracing the crypto industry could positively affect Israel’s economy because it could trigger the flow of diverse capital.
“The advanced technology in these assets can lead to economic efficiency in many areas, reduce costs, save the need for intermediaries and optimize the way information is transferred between entities,” the proposal reads.
The ISA added that cryptocurrencies have become a prevalent niche in the Mediterranean nation, with more than 200,000 Israelis having exposure to the market and about 150 firms operating in the field.
The proposal is open for public comments until February 12 and could go into effect after six months.
Reminder About FTX and Celsius
The ISA thinks global regulators failed to impose pertinent rules on the crypto industry last year, which led to the demise of many companies, such as FTX and Celsius Network. It also pointed out that the latter’s Founder is Alex Mashinsky, who has Israeli origin.
Celsius suspended withdrawals, swaps, and transfers between accounts in June last year, citing “extreme market conditions.” The company raised hopes that the move would stabilize its liquidity.
On the contrary, the problems for the former crypto giant continued, and it had to dismiss 150 of its total workforce in July. It filed for Chapter 11 bankruptcy protection a week later, while CEO Mashinsky resigned from his post in September. The company was close to inking an acquisition deal with FTX, but the latter’s doom erased those plans.
Celsius recently extended the deadline for customers to submit their claims until January 10 (at least). Viewed as one of the leading firms in the crypto lending space, it had 1.7 million clients at the beginning of last summer. Some of its creditors include the bankrupt Alameda Research and Pharos USD Fund SP.