The Tel-Aviv Exchange is moving to expand crypto trading to non-bank customers

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(Kitco News) – The Tel-Aviv Stock Exchange (TASE) is looking to expand its crypto trading services by allowing clients of its non-bank members (NBM) to access its crypto desk, according to an announcement made by the exchange on Monday.

TASE, which operates Israel’s only trading platform for public stocks, currently allows non-bank financial institutions – which are defined as financial institutions that do not have a full banking license and cannot accept deposits from the public – to offer services such as investments, advisory, brokerage or cashing checks.

The proposal to change the rules is now open for a period of public comment, and when the comment period is over, it will be submitted for approval by TASE’s board, the announcement states.

According to TASE, the turmoil experienced by the crypto market in 2022 has highlighted the need for regulation in the sector “that will reduce the various risks (operational, legal, cyber and other) inherent in cryptocurrency activity.

The rapid development of the cryptocurrency sector in recent years has led to increased engagement from TASE clients, resulting in an “increasing demand from clients to transfer funds from this activity to their accounts,” the exchange said.

The newly proposed structure would allow customers to deposit fiat money that can be designated for investment in cryptocurrencies and withdraw money derived from those currencies via a “licensed cryptocurrency trading service provider, or a licensed custodial service provider for those currencies.” “

Under the proposed structure, customers will deposit funds for the purchase of crypto into their account with NBM, and these funds will then be deposited into an omnibus account of NBM with the crypto trading service provider. Customers will then be able to submit purchase orders, which will be executed with the funds deposited in the omnibus account and will be registered on the customer’s account with NBM.

When the customer submits a sell order, the trading service provider will sell the coins and credit NBM’s omnibus account, at which point the proceeds from the sale will be transferred to the customer’s account with NBM.

Ultimately, regulators in Israel are looking to apply a similar regulatory regime to digital assets that is currently applied to non-digital assets, the release said, “taking into account the non-traditional and unique characteristics of this sector.”

For TASE, the purpose of proposing this update is to help promote Israeli capital markets in line with international standards, increase NBM’s ability to expand its areas of activity and enable its customers to trade in 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 enabling the Israeli public to invest locally, through supervised institutions,” the statement said . “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.”