Israel’s chief economist has laid out a list of recommendations for how policymakers should approach digital asset laws in the country to safely drive cryptocurrency adoption.
In a 109-page report submitted to the Finance Minister on November 28, Shira Greenberg, chief economist at the Finance Ministry, called for a more comprehensive regulatory framework that aligns trading platforms and cryptocurrency issuers and expands the powers given to their financial regulators.
Greenberg recommended that Israel improve security and investor protection by imposing stricter licensing requirements on trading platforms and cryptocurrency issuers.as well as ensuring that funds from digital assets are managed more securely.
Also It recommended that the supervisor of financial service providers have broader powers to oversee licensing rules and develop a more comprehensive tax framework for buying and selling digital assets.
Greenberg also recommended expanding the powers of the Israel Securities Authority, which he stated were necessary to determine if a digital asset falls within the scope of Israeli securities laws and to monitor the activity of payment service providers in the cryptocurrency space.
Regarding the legislation, Greenberg mentioned the need for specific authorization and supervision rules for stablecoin issuers, along with the proposal to create an inter-ministerial committee to examine and regulate blockchain-based decentralized autonomous organizations (DAOs).
He added that it is important that policy makers and legislators take into account the concept of technology neutrality when applying rules related to digital assets.
Finance Minister Avigdor Lieberman praised Greenberg for his work, saying the report “constitutes the most comprehensive and up-to-date currently available on this issue for government use” in Israel. and that it hopes that the “report will serve as a basis for future decisions and legislation” on matters related to digital assets in the coming months.
Despite Israel being often referred to as a tech-savvy nation, the country has not shown to be too obsessed with cryptocurrencies so far; ranked 111 out of 146 countries in a recent global cryptocurrency adoption index by blockchain data company Chainalysis.
Greenberg also referenced data in his report stating that Israeli residents have accounted for 21 million blockchain-based transactions in total, which is only equivalent to 0.04% of all cryptocurrency transactions worldwide.
For his part, only 2% of Israelis reported having or using a cryptocurrency wallet.
Looks like more adoption is on the way. The Tel Aviv Stock Exchange (TASE) recently announced on Oct. 24 its intention to create a blockchain-based platform to expand its cryptocurrency trading services. That same month, TASE also launched live testing of a digital bond tokenization pilot project, which is expected to be completed in the first quarter of 2023.
Government licenses are also being granted, with Israel-based trading platform Bits of Gold becoming the first company to receive a license from the Capital Markets Authority in September 2022. to store digital currencies through its own secure custodial wallet and to provide certain services related to digital assets to banks.
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