Regulatory Blitz: Bringing Cryptocurrency into the Mainstream
The Israel Securities Authority has released a draft circular expanding crypto trading options. This marks the third regulatory move in two months, aimed at establishing a transparent financial framework.
The Capital Market Authority has distributed a draft circular for the crypto industry. This is the third time in the last two months that the Authority has published new guidelines for the sector, while the Bank of Israel has simultaneously issued new directives for banks, in what appears to be an unprecedented regulatory blitz.
A cryptocurrency is a digital asset based on blockchain technology. It operates without a central intermediary and is characterized in most cases by high price volatility. For years, the Israeli crypto industry was perceived as a kind of "backyard" of the financial system: advanced technology operating under a cloud of legal uncertainty and persistent hesitation from the banking system. However, recent steps mark a shift toward principle-based regulation, aligning with global standards.
The draft circular defines which currencies Israeli crypto companies may offer for trading. A week earlier, mandatory security rules for digital wallets were established, alongside equity requirements. In mid-July, the Banking Supervision removed a significant barrier by canceling the automatic delay for crypto-originated funds exceeding 100,000 shekels. Additionally, a memorandum of law is being advanced to regulate the issuance of stablecoins pegged to the shekel and the dollar.
The circular establishes a mechanism allowing licensed companies to offer the 50 leading digital currencies globally, subject to strict criteria: a minimum market capitalization of 500 million dollars, a 15% ceiling for a single holder, and registration in recognized territories such as the European Union or the State of New York.
"Our main goal is to create a transparent and balanced framework that protects the public and prevents the entry of high-risk assets, while allowing the Israeli market to grow alongside global trends," explains Eli Tobol, Senior Deputy to the Commissioner for the Capital Market. "We are moving from individual asset-by-asset approval processes to broad and clear rules."
