Israel’s chief economist lays out recommendations for crypto regulation
Israel’s chief economist has released a list of recommendations on how policymakers should tackle digital asset laws in the country to safely drive crypto adoption.
In a 109-page report submitted to the Treasury Secretary on November 28, Shira Greenberg, chief economist at the Treasury Department, called for a more comprehensive regulatory framework that would bring trading platforms and crypto issuers into line and expand powers. given to their financial regulators.
Greenberg recommended that Israel should improve investor safety and protection by imposing stricter licensing requirements on trading platforms and issuers of cryptocurrencies, as well as ensuring that funds originating from digital assets are managed more securely.
She also recommended that the Supervisor of Financial Service Providers be given broader powers to oversee licensing rules and develop a more comprehensive tax framework for the purchase and sale of digital assets.
Expanded powers for the Israel Securities Authority were also recommended by Greenberg, who stated that the powers were necessary to determine whether a digital asset falls within the scope of Israeli securities laws and to monitor the activity of payment service providers in the crypto space.
In terms of legislation, Greenberg mentioned the need to implement specific licensing and oversight rules for stablecoin issuers, along with a proposed creation of an inter-ministerial committee to investigate and regulate blockchain-based decentralized autonomous organizations (DAOs).
She added that it was important that policymakers and legislators consider the concept of technological neutrality when implementing digital asset-related rules.
Finance Minister Avigdor Lieberman praised Greenberg for her work, stating that the report “constitutes the most comprehensive and up-to-date report currently available on this issue for government use” in Israel, and that he expects “the report will serve as a basis for future decisions and laws” on digital asset-related matters in the coming months.
Related: Israel’s regulator teases sweeping crypto framework at ICC
Despite being often referred to as a tech-savvy nation, Israel has not proven too crypto-obsessed so far, ranking 111th out of 146 countries in a recent global crypto adoption index conducted by blockchain data firm Chainalysis.
Greenberg also referenced data in her report that states that Israeli residents have accounted for 21 million blockchain-based transactions in total, which equates to just 0.04% of all crypto transactions worldwide.
Meanwhile, only 2% of Israelis reported owning or using a crypto wallet.
More adoption seems to be on the way. The Tel Aviv Stock Exchange (TASE) recently announced on October 24 that it intends to create a blockchain-based platform to expand its cryptocurrency trading services. In the same month, TASE also started live tests for a pilot project involving the tokenization of digital bonds, which is expected to be completed in Q1 2023.
Publicly issued licenses are also finally being issued, with Israel-based trading platform Bits of Gold becoming the first firm to receive a license from the Capital Markets Authority in September 2022 to store digital currencies through its own secured custodial wallet and offer certain digital asset-related services to banks.
