Israel Bar Association Criticizes Proposed Stablecoin Regulations
The Israel Bar Association submitted a critical position paper on the new stablecoins bill, warning of consumer protection gaps and unfair advantages for foreign fintech firms over local entrepreneurs.
The Israel Bar Association's Crypto Committee has submitted a formal position paper to the Ministry of Finance regarding the new legislative memo designed to regulate and supervise stablecoins. The document criticizes the proposed bill, arguing it fails to address how the public actually uses digital currencies and could subject Israeli entrepreneurs to stricter requirements than foreign companies.
Consumer Protection Gaps and Competitive Disadvantages
A central argument concerns the bill's focus primarily on the coin issuer and the initial sale stage. In practice, however, many users acquire these coins through trading platforms, digital wallets, and applications rather than directly from the issuer. The Bar Association warns this gap leaves consumers without adequate protections against theft, technical malfunctions, or asset freezing.
The proposed legislation risks stifling the local fintech sector by imposing heavy regulatory burdens on domestic players while potentially allowing foreign firms easier access to Israeli users.
Proposed Solutions and Regulatory Sandbox
Alongside the critique, Crypto Committee heads Adv. Inga Eisenberg and Uri Tzihor propose practical steps to foster industry growth. Key recommendations include:
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Establishing a regulatory sandbox allowing entrepreneurs to test new products under limited supervision for 24 months.
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Granting a transition period of at least 18 months for existing operations to apply for licenses without facing criminal liability.
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Enhancing risk management requirements and periodic stress tests for backing assets.
