Nov 29, 2022•2 min read
The chief economist of Israel offers suggestions for crypto regulation.
The chief economist recommended giving the Israel Securities Authority and the Supervisor of Financial Service Providers more power to supervise the industry.
Israel's chief economist has outlined a list of suggestions on how authorities should approach the nation's digital asset laws in order to securely increase crypto use.
Shira Greenberg, the chief economist at the Ministry of Finance, proposed for a more thorough regulatory framework that would bring trading platforms and cryptocurrency issuers under control and would increase the powers given to its financial regulators in a 109-page report submitted to the Minister of Finance on Nov. 28.
By requiring more stringent licensing standards of trading platforms and cryptocurrency issuers, as well as by ensuring that funds derived from digital assets are managed more securely, Greenberg suggested that Israel should strengthen investor assurance and protection.
Additionally, she suggested giving the Supervisor of Financial Service Providers additional authority to monitor laws and create a more thorough taxation system for the purchase and sale of digital assets.
Greenberg also advocated for the Israel Securities Authority to be given more authority, claiming that such authority is required to determine if a digital asset is subject to Israeli securities regulations and to keep track of payment service providers' activities in the cryptocurrency industry.
Greenberg mentioned the necessity for particular stablecoin issuer license and monitoring requirements, as well as the suggestion to create an inter-ministerial commission to review and manage blockchain-based decentralized autonomous entities, in terms of legislation (DAOs).
She also said that it was critical that politicians and policymakers make laws related to digital assets while keeping in mind the idea of technological neutrality.
The report, according to Israel's Minister of Finance Avigdor Lieberman, "constitutes the most comprehensive and up-to-date report currently available on this issue for government use," and he assumes that it "will serve as a basis for future decisions and legislation" on issues relating to digital assets in the months to come.
Despite Israel being frequently described as a technologically advanced country, the country hasn't yet shown a significant interest in cryptocurrencies, ranking 111th out of 146 nations in a recent global cryptocurrency adoption index conducted by blockchain data company Chainalysis.
Additionally, according to data cited by Greenberg in her analysis, Israeli citizens have only been involved in 21 million blockchain-based transactions, or 0.04% of all cryptocurrency transactions worldwide.
Only 2% of Israelis claimed to possess or use a cryptocurrency wallet, nevertheless.
The adoption rate seems to be increasing. On October 24, the Tel Aviv Stock Exchange (TASE) revealed its plans to build a blockchain-based trading platform to expand its trading services to cryptocurrencies. TASE began live testing for a pilot project involving the tokenization of digital bonds in the same month. The project is expected to be finished in Q1 2023.
Government-provided licenses are now being issued too, with Israeli trading platform Bits of Gold becoming the first company to get a license in September 2022. This license will allow Bits of Gold to hold digital currencies through their own protected custody wallet and offer specific digital asset-related services to banks.
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