Israel’s proposed legislation to classify cryptocurrencies as securities could have a detrimental impact on the local crypto industry warns the CEO of a prominent Israeli crypto service provider. In a recent interview, Ilan Sterk, CEO of Altshuler Shaham Horizon, shared his concerns over the current legal situation for cryptocurrencies in Israel.
Crypto Classifications: A Game Changer
According to Sterk, the new bill being considered would bring digital assets under the control of the Israel Securities Authority (ISA), leading to a significant shift in the crypto environment within the country.
He highlighted that classifying all digital assets as securities would be detrimental to the industry and suggested that the proposal may not be enacted in its current form.
Sterk said:
To classify a digital asset as a security, it’s changing everything here. You cannot classify all the digital assets as securities because it will kill the industry.
In early January, the ISA released a proposal aimed at giving the regulator more power to police the Israeli crypto industry. The proposal seeks to amend the definition of securities to include “digital assets” and grant the ISA the power to oversee the industry, set requirements for issuers and intermediaries, and impose sanctions for non-compliance.
Under the proposal, issuers of digital assets would need to publish a prospectus-like document before issuing or registering digital assets for trading. However, the public has until February 12th to provide feedback on the proposal.
In November of last year, the Ministry of Finance laid out its recommendations for the regulation of the digital assets industry in Israel. One of the proposals will allow digital assets service providers to operate temporarily in Israel if they have a parallel license from abroad.
Sterk believes this would make it easier for foreign exchanges to operate in the country, as obtaining a license in Israel can take several years.
According to the ISA, there are around 150 firms in the local digital assets sector, and over 200,000 Israelis have invested in digital currencies. However, the potential securities classification could significantly impact the crypto industry in Israel, and its outcome is uncertain at this time.
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