Israel regulator wants law amended for better crypto regulation

The Israel Securities Authority (ISA) has forwarded draft amendments on crypto. It aims to protect citizens from the risks associated with trading digital assets.

ISA is responsible “for safeguarding the interests of the public investing in securities”. According to the draft bill, it wants the country to be agile and flexible so that laws can be quickly drafted and implemented to suit the fast-paced, highly dynamic nature of cryptocurrencies and blockchain. If this draft amendment becomes law, Israel will have digital assets regulated by the same rules governing securities like stocks, exchange-traded funds (ETFs), and other instruments. 

According to the ISA report, the objective is to protect Israelis from increasing risks in crypto which the regulator said rose in 2022. The contraction of crypto prices and macroeconomic factors in the country and across the globe saw asset valuations more than halved, compounding problems for some CeFi operators. 

Eventually, the collapse of FTX and the bankruptcies of leading lending platforms like Voyager Digital, BlockFi, and Celsius Network saw investors heavily impacted by the resulting liquidity crisis. Celsius Network was headquartered in Hoboken, New Jersey, but maintained offices in four other countries. However, its CEO, Alex Mashinsky, has roots in Israel. 

Reports indicated that investors are yet to reclaim over $4.2 billion from the Celsius Network as of July 2022. As of early September 2022, Celsius Network was looking to reimburse $50 million of the over $200 million in customer funds locked up in their custody.

Proposals by the ISA are open for public commentary until Feb. 12. The regulator suggests a six-month lead-up before the amendment is made to the law, allowing them to prepare for supervision properly. 

Israel remains pro-technology, seeing cryptocurrencies and blockchain as opportunities to grow its economy and foster innovation.

Earlier, an analyst in Israel proposed giving the ISA more power to regulate digital assets.

From Aug. 1, Israel banned cash payments for personal and business transactions exceeding $4.4k and $1.76k, respectively. The Israel Tax Authority said the goal is to tackle money laundering and promote digital payments.