Cryptocurrency Regulation

Israel Securities Authority Recommends Development of a Dedicated Token Exchange

March 8, 2019
Saad Mohammad

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Israel Securities Authority Recommends Development of a Dedicated Token Exchange

A committee put together by the Israel Securities Authority (ISA) has recommended that the country should develop a dedicated token exchange to make it easier for residents to trade cryptocurrencies.

A dedicated token exchange could help regulate coin offerings

The ISA committee was put together to look into the regulation of cryptocurrency coin offerings in the country. The body submitted its final recommendation on March 6, with one of the options being to develop a dedicated platform for trading digital assets.






The Committee for the Examination and Regulation of the Issuance of Cryptographic Coins was created in August 2017 and is supervised by the ISA. It has been tasked with evaluating the applicability of local securities laws on initial coin offerings and security token offerings. The committee was asked to study and categorize crypto projects in the country, compare the crypto laws of various countries across the globe, and recommend regulatory policy measures in fields related to securities offerings. The committee aims to do this while ensuring that technological innovation is encouraged and that the interest and wealth of the public are safeguarded.

In March last year, the committee published its report asking for public comment on the above issues. They have since held several meetings with crypto industry leaders and academic experts to discuss these issues in an attempt to regulate the emerging market in a better and more comprehensive way. The final report that was published revealed that several changes have taken place in the coin offering sector since the initial interim report was made public. The most significant difference perhaps is the decline in ICOs over the past few years. The committee pointed out that most of the fundraising in the crypto sector is now done by sophisticated investors, with the emergence of security token offerings (STOs) taking center stage in the crypto market now.

Securities laws could be applied to crypto asset issuance

The final report offered a few recommendations to the Israeli government. The first is for securities law to be used when crypto assets are being issued while ensuring that all required disclosure requirements are customized (or are at least flexible) for the unique characteristics of the activities of the crypto projects in question. The second primary recommendation was for the government to adopt the use of a regulatory sandbox framework with the aim of allowing the ISA to gain experience in the crypto sector and to help entrepreneurs work with the format created.

The committee also recommended examining the possibility of making various changes to current regulations to ensure that they create an environment that is conducive to trading activity. This will come in the form of developing a dedicated trading platform specifically for crypto assets. The committee believes the dedicated platform would be the best way to eliminate the risk involved in coin offerings and crypto assets trading. They further recommended that the ISA should build on the current regulation of crowdfunding in Israel to ensure that local laws and policies meet internationally accepted guidelines and best practices.

The committee stated that it is imperative that there should be a direct relationship between regulators and the crypto industry. Cryptocurrency projects were encouraged to contact the ISA with the hope of examining their activity in an open and transparent manner. This would help them regulate the industry better and more effectively.

The move made by the ISA to invite crypto companies to discuss regulatory issues is significant as well, as it ensures that the cryptocurrency industry will have a say in how it will be regulated. It would also help boost the growth and development of innovations.

Regulation of the crypto sector has picked up steam in countries all over the world. The establishment of a dedicated crypto trading platform would boost investor and trader confidence in Israel, and this is expected to go a long way in helping crypto adoption in the country.