Capital Markets Authority Sets Listing Rules for Virtual Currencies in Israel

The Capital Markets Authority published a draft circular on Tuesday that defines, for the first time, which virtual currencies Israeli crypto companies may offer to their clients. While the public often associates the digital currency market with well-known names like Bitcoin or Ethereum, over 13,000 virtual currencies are traded globally, including speculative "meme coins" and assets with questionable liquidity.

Until now, the decision of which currencies to offer was left to the commercial discretion of local companies, but the new circular seeks to establish uniform regulatory boundaries. This move complements previous steps taken by the Authority to institutionalize the industry.

Threshold Conditions for Assets

The regulator has set a series of strict criteria for digital assets:

• A market value of at least 500 million dollars.

• Inclusion among the top 50 largest digital assets globally for six consecutive months.

• Proof of registration for trading with at least five regulated entities in the European Union or the State of New York.

To reduce the risks of fraud and manipulation, a "decentralization test" is required: it is forbidden for a single entity to hold more than 15% of the currency's circulation, or for the ten largest holders to collectively hold more than 50% of all assets. The Authority also completely excludes assets that provide full anonymity, as well as NFTs.

Regulation of Stablecoins

The circular creates an easier path for stablecoins pegged 1-to-1 to fiat currencies (such as the shekel or dollar). If such an asset is issued in Israel under local supervision, it is exempt from market value and international rating conditions, aiming to encourage regulated activity in the domestic market.

Operational Responsibility for Companies

The new procedures impose direct operational obligations on companies:

• The board of directors must approve the internal listing policy annually.

• Any addition of a new currency requires an examination by the risk and cyber defense manager, and prior notification to the Authority 60 days before launch.

• Quarterly monitoring: assets that no longer meet the criteria must be removed from purchase options within three days, with a 30-day notice provided to clients.

This move aims to balance risk reduction for the public with the commercial flexibility of licensees, ensuring that local trading focuses on assets with proven liquidity and international backing.