Israel Creates Crypto Regulations to Protect Investors from Risks

5. January 2023

• The Israel Securities Authority (ISA) has proposed draft amendments to regulate digital assets like cryptocurrencies.
• The proposed amendment seeks to protect citizens from the risks associated with trading digital assets.
• The amendment would see digital assets regulated by the same rules governing securities like stocks, ETFs, and other instruments.

The Israel Securities Authority (ISA) is looking to protect citizens from the risks associated with trading digital assets. The regulator has proposed draft amendments that would see digital assets regulated by the same rules governing securities like stocks, exchange-traded funds (ETFs), and other instruments.

The proposed draft amendment is intended to be agile and flexible so that laws can be quickly drafted and implemented to suit the fast-paced, highly dynamic nature of cryptocurrencies and blockchain. The objective is to ensure the safety of investors and to prevent the increasing risks in crypto which have risen since 2022.

The contraction of crypto prices and macroeconomic factors in the country and across the globe saw asset valuations more than halved, compounding the problems for some CeFi operators. This led to the collapse of FTX and the bankruptcies of leading lending platforms like Voyager Digital, BlockFi, and Celsius Network.

Celsius Network was headquartered in Hoboken, New Jersey, but maintained offices in four other countries. Its CEO, Alex Mashinsky, has roots in Israel. Reports indicated that investors are yet to reclaim over $4.2 billion from the Celsius Network as of July 2022. As of early September 2022, Celsius Network was looking to reimburse $50 million of the over $200 million in customer funds locked up in the platform.

The proposed amendment, if passed into law, will ensure that the interests of the public investing in securities are safeguarded, and that the risks associated with trading digital assets are minimized. It is expected to ensure the safety of investors and to prevent the increasing risks in crypto, while also providing a legal framework for the country to be more agile and flexible in regulating the crypto space.

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