The Israel Securities Authority proposed new legal definitions for digital assets, which would formally establish government oversight – most commonly as securities.
The Israel Securities Authority (ISA) is working to create a new legal structure for digital assets that will bring them largely under the authority’s purview, which could provide greater clarity to the industry.
According to the proposal, the amendments to the country’s laws would incorporate “digital assets” into existing securities regulations, potentially treating most crypto as financial investments supervised by the ISA. The assets would be defined as digital representations of value used for financial investment and transferable via a distributed ledger under the changes, and digital assets would be added to the existing category of “financial instruments” in Israeli securities law.
According to the agency, this effort is intended to protect investors while also allowing for the unique benefits of cryptocurrency. Although existing securities laws can already regulate some digital asset activity, the ISA claims that the regulations are difficult to apply as written.
The authority’s proposal is open for public comment until Feb. 12, and it suggests a six-month transition period after approval. The ISA has also tried to keep in mind that regulations must be adaptable to changes in the technology underlying digital assets.
Anat Guetta, the ISA’s chairwoman, has made it clear that she, like US Securities and Exchange Commission Chairman Gary Gensler, does not see much difference between cryptocurrencies and securities. “We need to wake up and realise that there is no real difference between crypto and securities, and we need to unify the definitions in order to protect consumers and investors, and to make this industry legitimate,” she told CoinDesk last year.
According to the agency’s proposal this week, the industry has suffered greatly from high-profile failures, such as the collapse of Celsius, which had significant operations in Israel.
This latest action by the country’s securities watchdog follows the Ministry of Finance’s decision to publish a set of recommendations for the regulation of digital assets in November, aimed at advancing Israel’s foray into the sector.
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