Tel Aviv moves forward towards allowing crypto trading

by Arthur · March 1, 2023

The Tel Aviv Stock Exchange, or TASE, plans to expand its authorized activities to offer customers from the non-banking sector the opportunity to trade crypto. TASE operates Israel’s only public equity platform.

The draft approval in which TASE takes steps to introduce digital asset trading activities has been published for public comment based on recent announcements. The first announcement was made on February 27, saying the proposed structure would allow customers to deposit fiat currency, which can then be used to invest in digital assets.

TASE’s regulatory initiative to expand the list of authorized services for non-banking institutions (NBIs) is now open for public comment.

NBMs are primarily intermediaries that provide brokerage, investment and advisory services. NBMs can process multiple transactions that include the transfer of funds, but they are not allowed to accept direct deposits from customers or even act as custodians.

TASE has specifically talked about how customers will be allowed to deposit fiat currencies to trade crypto; likewise, clients should also be allowed to withdraw their money after selling crypto.

However, the working analysis of this system is still complicated and not much has been revealed about it yet. It is mentioned that TASE is continuously working to ensure that the trading process remains safe with proper consumer protection.

If this new proposal is approved, NBMs will be licensed crypto and custody service providers. Until then, customer funds will be transferred to an “omnibus account”, which will act as an intermediary for crypto trading activities. The previous year, Tel Aviv’s banking institution, Bank Leumi, had already started offering crypto trading services to clients in partnership with Paxos.

Increasing demand for crypto

In the press release, TASE continues to talk about all the unfortunate events that have occurred in the crypto industry over the past year and how they continue to impact the space.

It also highlights that despite the risks involved in the industry, customers have demanded crypto services, which now require the presence of regulated institutions. TASE believes that the involvement of these institutions will help to reduce the risk associated with the virtual asset industry.

It stated that the proposal has not yet been tabled, and once tabled, it will require board approval,

This is another step in the progress and development of the Israeli capital market which aims to encourage innovation and competition while reducing risk and protecting clients.

Where do Israeli regulators stand?

Israel has maintained a positive attitude towards cryptocurrencies as a nation that has participated in the industry. With countries working on crypto regulations worldwide, the Israeli government is also moving towards the same goal.

Last November, Israel’s Ministry of Finance issued its own guidelines to regulate virtual assets. It published its recommendations on the regulation and oversight of the activities related to crypto and stablecoins in a report titled “Regulation of the Digital Assets Sector: Roadmap to a Policy.”

Earlier this year, the Israel Securities Authority (ISA) released a draft proposal defining the legal status of cryptocurrencies. The report talked about how Israeli regulators are trying to impose regulations on digital assets while ensuring that these regulatory guidelines are not too different from those imposed on non-digital assets.