The Israel Securities Authority (ISA) has published its final report on the cryptocurrency industry and it may be moving forward with regulations.
The news as reported by local business outlet Globes detailed the findings of the committee tasked with the responsibility of drafting a regulatory framework for the industry. It recommended bringing the industry under the purview of the security laws as concerning the issuance, and trading of cryptocurrencies that constitute securities.
The committee, headed by Securities Authority chief economist Dr Gitit Gur-Gershgoren and former corporate finance department Adv Moti Yamin, has also said that supervision can contribute to progress in the cryptocurrency sector considering that there is a significant connection between the regulator and the cryptocurrency industry.
It, however, seems the regulator will be keeping an open mind towards the emerging digital assets. However, for the industry to continue functioning in the jurisdiction, operators have been urged to contact the securities authority before engaging in any form of cryptographic asset offering, and cryptocurrency exchanges will as well be supervised.
The committee had submitted an earlier report in March 2018, however, according to the recent report, so much has changed in the industry. The report identified changes in both the technological aspects and the nature of tokenized asset offerings, especially how they are conducted in the western markets – in accordance with the securities laws. Gur-Gershgoren summarily said:
“The cryptographic assets field proved to us over the past year that a careful and prolonged consideration of this dynamic and innovative sector enables us to make decisions that preserve the balance between the need to promote innovation and the obligation to preserve investors’ interests. The excitement that permeated the sector in 2017 has cooled, but the technology is here to stay.”
He further noted that the changing trends in the industry although require as much supervision as possible, reinforces the idea of formulating regulations that support its development. While he pointed out that technological innovation can potentially streamline, improve, and enhance competition in the capital market and the entire economy, the place for a sandbox regulatory environment was considered pivotal to shaping the regulations alongside the innovations brought about by the technology.
For many jurisdictions, a sandbox has been the preferred route towards regulation before issuing a comprehensive rule book in order to better understand the sector. Recently, Bahrain’s central bank launched its blockchain sandbox program to allow operators to continue with their activities under supervision while consultations for prospective framework proceeds.
Last year, Hong Kong’s regulator said it would allow a sandbox environment to determine its regulatory stance.
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