Since the beginning of 2018, Israel Regulators have been working on understanding the nature of digital currencies and ICOs and determine whether the crypto-related companies would be allowed to get registered on the country’s own Tel Aviv Stock Exchange (TASE) or not.
It seems that the regulators have finally come to conclusion regarding this matter as a special committee formed by the Israel Security Authority (ISA) has determined that cryptocurrencies, in general, don’t qualify for the status of security when used only for consumption purpose which means being used as a means of payments without any rights involved.
The ISA committee revealed that “As a general rule, cryptocurrencies that are designed to be used exclusively as a medium of payment, clearing, or exchange and are not limited to a specific venture; that do not confer additional rights; and are not controlled by a central entity — will not be deemed securities.”
Last year in August, the ISA had set an interdepartmental committee, headed by ISA chief economist Gitit Gur-Gershgoren, whose main job was to determine whether the securities law is applicable to the Israeli public offering on decentralized registrations.
The task of the committee was to characterize and study these projects while making a comparative review of the law of different countries and thus formulate a regulatory policy outline. However, all this was to be done by maintaining a perfect balance between protecting investor’s interests and encouraging technological innovation at the same time.
The project in its report concluded that digital currencies used with the sole intent for consumption are not a security. The report states:“As a general rule, cryptocurrencies that confer rights similar to the rights conferred by traditional securities such as shares, bonds, and participation units, will be deemed securities. In contrast, cryptocurrencies that represent rights to a product or service and are acquired solely for the purpose of consumption and use and not for investment purposes, will not be considered securities.”
Many analysts are saying that this is certainly a precedent-setting decision while government and regulatory bodies across the globe are struggling to classify digital currencies. The recommendations of this report were further submitted to the newly appointed ISA chairwoman Ms. Anat Guetta. Ms. Guetta has expresses some sort of hostility for cryptocurrencies in the past while announcing that ISA will take every step to ban crypto-related companies to get registered with the Tel Aviv Stock Exchange (TASE).
She said: “We have decided to prevent the exposure of passive investors to companies whose main activity involves cryptocurrencies. Investment in these companies is high risk, speculative and volatile. We also published a detailed warning to investors about the dangers of investing in cryptocurrency.”
