No Scam Or How Israel Crypto Community Came to Self-Regulation
RegulationBit News Today2 min read
The Israeli crypto community has self-regulated in the absence of formal laws, as evident from the rigorous process undergoing a Bitcoin purchase in Israel.
As part of the authentication process required to buy Bitcoin from Bits of Gold, a picture was uploaded of Tamar holding her credit card, which was then sent to the seller. Because Bits of Gold was instructed to send the sale proceeds directly to the university's account, documentation had to be submitted showing the university was legally established under Israeli law.
In 2015, Bank Leumi moved to restrict transactions for the Tel Aviv cryptocurrency broker Bits of Gold. The bank cited regulatory concerns, a Bank of Israel decree, and categorized the broker as a gambling operation, though Justice Baron noted that the Supreme Court has not determined whether such refusals are reasonable. The bank placed a sweeping block on all transfers going into and out of the company's account. On a Monday, Supreme Court Justice Anat Baron issued an interim order barring Bank Leumi from restricting the account, a ruling that Mr. Zioni said essentially confirmed that digital currency trading is not prohibited. As stated by Deputy Governor Nadine Baudot-Trajtenberg: “a major problem is the anonymity of bitcoin and other digital currencies, at a time when banks are withdrawing from the use of cash.”
In January 2018, the Bank of Israel stated that virtual currencies are treated as financial assets rather than actual currency, a classification that under 2016 regulations requires financial service providers to obtain a license. The Israel Securities Authority determined that cryptocurrency firms will be excluded from Tel Aviv Stock Exchange indices. The Securities Authority, which is working to bolster certainty and balance technical innovation against the protection of investors, submitted its interim committee report to Chairperson Anat Guetta.
Israel is on the verge of regulating ICO offerings, possibly by creating a "sandbox" pilot program. A decision to open a trial environment for companies issuing tokens would be a notable step, signaling the Authority's attempt to establish a regulatory framework.
The proposed options include assessing offerings individually under standard initial public offering rules, or granting firms temporary regulatory relief through a sandbox pilot program.
