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Israel’s Securities Watchdog Moves to Better Supervise Crypto Assets
The Israel Securities Authority proposed new legal definitions for digital assets that would formally establish their government supervision – most frequently as securities.
The Israel Securities Authority (ISA) is moving to establish a new legal structure for digital assets that puts them largely under the authority’s umbrella, which could provide the industry with greater clarity.
The amendments to the country’s laws would squeeze “digital assets” into existing securities regulations, according to the proposal, potentially treating most crypto as financial investments supervised by the ISA. The changes would define the assets as digital representations of value that are used for financial investment and that can be transferred using a distributed ledger. Digital assets would be added under the existing category of “financial instruments” in Israeli securities law.
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This effort is meant to protect investors while also allowing for the unique advantages of cryptocurrency, the agency said. Though existing securities laws can already regulate some digital assets activity, according to the ISA, the regulations can be difficult to apply as currently written.
The authority’s proposal is open for public comment until Feb. 12, and the regulator suggests a six-month period before it would go into full effect after approval. The ISA has also sought to keep in mind that the regulations must be flexible to adapt to changes in the technology behind digital assets.
Anat Guetta, chairwoman of the ISA, has made it clear that she – taking cues from U.S. Securities and Exchange Commission Chairman Gary Gensler – didn’t see much distinction between cryptocurrencies and securities. “We have to wake up and understand that there is no real difference between crypto and securities and we have to unify the definitions in order to protect consumers and investors, and to make this industry legitimate,” she said in an interview with CoinDesk last year.
The industry has suffered mightily from high-profile failures, the agency noted in this week’s proposal, including the collapse of Celsius Network, which had significant operations in Israel.
This latest action from the country’s securities watchdog comes on the heels of the Ministry of Finance’s move to publish a set of recommendations in November for the regulation of digital assets, meant to advance Israel’s foray into the sector.
Jesse Hamilton
Jesse Hamilton is CoinDesk's deputy managing editor on the Global Policy and Regulation team, based in Washington, D.C. Before joining CoinDesk in 2022, he worked for more than a decade covering Wall Street regulation at Bloomberg News and Businessweek, writing about the early whisperings among federal agencies trying to decide what to do about crypto. He’s won several national honors in his reporting career, including from his time as a war correspondent in Iraq and as a police reporter for newspapers. Jesse is a graduate of Western Washington University, where he studied journalism and history. He has no crypto holdings.
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