With multiple companies from the space collapsing one after the other, regulators around the world have keenly been looking to tighten the screws and protect investors. A day back, ECB President—Christine—Lagarde reiterated calls for ‘MiCA II’ in response to the downfall of crypto exchange FTX.
In another parallel development that shaped up on Monday, Israel’s Ministry of Finance published a set of recommendations pertaining to the regulation of digital assets.
The same, as such, demands the creation of new regulatory infrastructure, legislating licensing powers over the issuance of backed digital assets—including stablecoins.
Furthermore, the proposal also called for legislation to be passed that would transfer supervision over digital assets “that have a significant stability or monetary effect” to the Bank of Israel.
Commenting on the need for regulations, Minister of Finance—Avigdor Lieberman—said,
“The field of digital assets, which may become an integral part of the financial and economic system, is still characterized by high risks and uncertainties for both consumers and the system as a whole. All of these require an informed policy by the government.”
Another recommendation demanded the establishment of a committee for Inter-ministerial examination of the regulation of decentralized autonomous organizations (DAOs).
According to Israel’s tax authority, uncollected crypto taxes from 2019 to 2022 could amount to several billion shekels. Thus, a proposal for allowing the payment of taxes on crypto held abroad via the Bank of Israel was also produced.
The Need for Regulations
The officially released document pointed out that the recommendations were drawn up taking into account the emerging regulation policy regarding digital assets in other developed countries, especially EU’s MiCA. Commenting on similar lines, Chief Economist of the Israeli Ministry of Finance—Shira Greenberg—said,
“The regulation processes are being formulated and determined during this period in various countries in the Western world and it is recommended that the state Israel will act in accordance with the emerging standards in the developed world.”
The crypto space, as such, has been blooming in Israel. A recent report from Chainalysis revealed that the said Middle Eastern country was experiencing a surge in crypto transactions.
In fact, a host of companies have also started testing the crypto waters. For instance, the Capital Markets Authority—Israel’s primary market regulator—approved the license for the local crypto exchange, Bits of Gold towards the end of Q3. The same marked one of the first licenses for a crypto service provider in the country.
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