Israel Regulators Punt on Crypto Exchange Rules
Score one for overseas crypto traders.
Israeli finance regulators failed to gain passage of a set of regulations designed to protect investors who trade crypto traders. The Finance Committee of the Knesset convened a special meeting late last week and decided to postpone the law regulating the nation’s cryptocurrency exchange.
The original law was to take effect on June 1 but will now go into effect Oct 1.
Without the regulations, the nation’s financial services providers and Israeli companies will remain without any legal framework governing the trading and investing into cryptocurrencies.
Two weeks ago, the Israeli Ministry of Finance, headed by Moshe Kahlon, published a draft of a prohibition on money laundering that would apply to financial services providers that operate in digital currencies. It was supposed to be the dawn of digital currency regulation for vehicles such as Bitcoin and Ethereum, and enables institutional banks to enter the field.
Jacob Enoch, head of M&A at M. Firon & Co. and Co-chair of the Israel Bar Association’s committee on Blockchain and Cryptocurrency, told Traders Magazine that the last-minute decision to postpone the entry into force of the new legislation is nothing short of dramatic.
“There is no doubt that this decision plays into the hands of the large financial institutions, who, understandably, fear the competition that is certain to be generated by the entry into the sector of regulated Fintech companies,” Enoch said. “I am concerned that the message of instability sent by this decision could lead to stagnation in the existing Israeli fintech industry and to inhibit the launch of new startup companies featuring innovative financial solutions. One can only hope, that such inevitable antagonism among fintech investors will not snowball into a potential loss of trust.”
Jeremy Dahan, CEO at Hello Diamonds Blockchain, who was against the decision by the Israeli government added the postponement is a sign of the unwillingness to make a decision.
“We feel that there is deep disdain for the (crypto) industry and its people. Close to 50 Israeli start-ups have already begun their preparations, and some have raised huge sums of money to do so,” Dahan said. “The ball is in the hands of the Capital Market Authority, which needs to install an appropriate money laundering prohibition order, which can shorten the duration of the delay. We hope so.”
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