Non-bank members will allow their customers to trade in cryptocurrency

This is another step in the development and evolution of the Israeli capital market that aims to encourage innovation and competition, while reducing risk and protecting clients

TEL AVIV, Israel, 27 February 2023 /PRNewswire/ — The Tel-Aviv Stock Exchange (TASE: TASE) today publishes draft public comments for approval of the expansion of the authorized activities of non-banking members (NBM) to include trading in Cryptocurrency.

The Cryptocurrency the market has experienced turmoil in the past year, which has led to significant changes Crypto activity, as more regulated institutions participate in this activity. These disturbances emphasize the need for regulation in this sector, in light of the rapid development of Cryptocurrency sector in recent years and greater involvement of customers in this sector, accompanied by an increasing demand from customers to transfer money from this activity to their accounts. This requires regulation that will reduce the various risks (operational, legal, cyber and others) inherent in Cryptocurrency Activity.

Protection of customers as an inherent component of the activity structure

The proposed structure will enable the customer to deposit money (Fiat money) designated for investment in crypto currency and withdraw money derived from these currencies as follows: NBM will contact two functions – the first, a licensed provider of Cryptocurrency trading services, and the other, a licensed provider of custody services for those currencies. To buy Crypto currency, the customer will deposit into his account with NBM the money in traditional currency (NIS or foreign currency) (Fiat money) which will be deposited into an omnibus account of NBM with the provider of the trading services (similar to the activity in foreign securities) . After receiving an order to buy Cryptocurrency from the customer, the purchase will be made with the money deposited into the omnibus account, as mentioned above, and will be registered on the customer’s account with NBM. When the customer gives an order to sell Cryptocurrencythe merchant service provider will sell the coins and credit NBM’s omnibus account with the received consideration (Fiat money), and then the consideration will be transferred to the customer’s account with NBM.

Regulation i Israel

The report, “Regulation of the Digital Assets Sector – Roadmap to a Policy”, published by the chief economist of the Ministry of Finance last November, as part of a large-scale study involving all financial regulators, including the Israel Securities Authority, the Capital Markets Authority and the Bank of Israelindicates that the current regulatory approach i Israeland in certain other countries, shall impose regulation of financial activities or services in digital assets in the same way as that which currently applies to non-digital assets, taking into account the non-traditional and unique characteristics of this sector.

Global regulation

The regulation and supervision of Cryptocurrency service providers are still under development. International authorities recommend a State regulation which will apply to global standards and guidelines also for the digital currency sector, as reflected in the requirements of the Financial Action Task Force (FATF) and the recommendations of the International Monetary Fund. Centralized processes for regulating this activity i the United States and in the EU are at different stages of progress.

IN state of New Yorkregulation over virtual currencies has already been introduced in 2015, and service providers in these currencies are under the supervision of state of New York Department of Financial Services. The NYDFS imposes specialized strict regulation on institutions operating in the sector, which are required to apply for a dedicated license to operate (“BitLicense”). As part of the regulation, the NYDFS publishes a public list of cryptocurrencies authorized for activity by licensed institutions.

The TASE staff prioritizes the regulation and promotion of trade in Cryptocurrency as a means of upgrading the Israeli capital market in line with international standards, as well as NBM’s ability to expand its areas of activity and its customers’ ability to trade with Cryptocurrency. TASE believes that the alignment of local regulation with international regulation will attract more foreign investment and foreign investors into the Israeli market, while also enabling the Israeli public to invest locally, through supervised institutions. This move will facilitate the development and advancement of the Israeli capital market and encourage innovation and competition, while addressing the risks inherent in this activity. Within this framework, TASE proposes an amendment to the TASE rules that will allow NBMs to allow their clients to trade in Cryptocurrency.

A proposal for public comments on this matter was posted this morning on TASE’s MAYA system. After receiving comments from the public, the proposal will be sent for approval by the TASE board.

Contact:
Orna Goren
Head of communications and public relations
Tel: +972 76 8160405
[email protected]

SOURCE Tel Aviv Stock Exchange Ltd.