Crypto Companies CEO Responds to New Israeli Guidelines

Following the publication by the Capital Market Authority regarding the virtual currencies permitted for crypto companies in Israel, the CEO of crypto companies, Nir Hirschman, responds to the matter:

"We welcome the draft circular published by the Capital Market Authority as part of the regulation process for the crypto market activity in Israel. This is a positive and important progress that will assist the market, as it provides regulatory clarity and creates a clearer working environment for the industry.

The standards that the Authority presents in the new circular are similar to what local companies are already enforcing on themselves on an ongoing basis. The draft even includes several requested easements, such as, for example, principled approval to list a virtual currency that is included in the list of the 50 leading currencies in the world, and in addition, it encourages the holding of regulated and stable currencies.

Alongside this, the draft raises certain questions, for example, regarding how a foreign crypto exchange that would want to enter and operate in Israel would act, and other questions that arise from the details of implementing the policy on the ground. We will continue to work in cooperation with the regulator to ensure that the regulation protects the public, but also allows for the continued growth of the local industry. Israel must continue the effort of regulation and legislation around the crypto field so that we can align with other advanced countries and lay the financial infrastructure of the future."

As recalled, within the framework of the moves promoted by the Authority to institutionalize the crypto industry in Israel, new guidelines were published dealing with the aspects of listing digital assets for trading. While past instructions focused on the financial stability of the companies and standards for wallet security, the current circular defines clear criteria regarding the currencies themselves.

In order for a virtual currency to be sold to the Israeli public, it must meet a series of threshold conditions:

• A minimum market value of 500 million dollars and a position among the 50 leading digital assets in the world for at least half a year consecutively.

• An obligation for listing for trading at at least five regulated entities in the European Union or in the State of New York.

In order to reduce phenomena of price manipulation and fraud in trading, the regulator sets a strict decentralization test. It is forbidden for a single entity to hold more than 15% of all coins in circulation, and the ten largest holders together will not be able to hold more than half of all assets.

At the same time, the Authority completely disqualifies the use of currencies that guarantee full anonymity and make it difficult to track the movement of funds. Also, assets of the NFT type, unique tokens for representing ownership of collectibles and art, were excluded from the regulation, since they are not considered regular tradable currencies.