The Israel Securities Authority (ISA) has released a draft proposal in order to define the legal status of cryptocurrencies in the country. These amendments to Israel’s securities laws would expand crypto supervision and would make sure that crypto assets are covered by the regulatory framework and placed under its oversight.

The ISA emphasised that crypto assets are often used for investment, which is why it put forward these new proposals. The proposals would change the existing securities laws so that they would apply to digital assets. If everything goes according to plan, digital assets would be seen as virtual representations of value that fall under the category of financial instruments.

According to stl. news, the ISA believes that cryptocurrencies are similar to traditional securities, and while they can be used for financial investments, they are currently not included in the country’s law. The ISA also argued that it would be able to protect investors while regulating the industry that deals with these assets, should the new proposals come into effect.

The proposals will be open to public feedback and comments until the middle of February 2023. If the new rules are approved, they would be enforced six months afterwards in order to ensure a proper transition. Israel’s Ministry of Finance proposed new digital asset guidelines In November 2022, the Israel Ministry of Finance published a set of recommendations  for the regulation of digital assets.

According to coindesk. com the recommendations called for the creation of a new regulatory infrastructure, legislating licensing powers and supervision over the issuance of backed digital assets, including stablecoins, and the provision of financial services through them. The recommendations also proposed new legislation that would support the Bank of Israel’s supervision of digital assets that have a significant stability or monetary effect.

Furthermore, the guidelines included a proposal for allowing the payment of taxes on crypto held abroad through the Bank of Israel. Another suggestion included establishing an inter-ministerial committee that would oversee the regulation of decentralised autonomous organisations (DAO). However, one of of the most important aspects of the proposal included the taxation of cryptocurrencies.

Israel’s tax authority reported that uncollected crypto taxes from 2019 to 2022 could amount to hundreds of millions of dollars. The report was prepared at the request of the Minister of Finance by a team in the Chief Economist's Division, in consultation with regulators and relevant government officials, experts and representatives of the local industry. The recommendations were drawn up taking into account the emerging regulation policy regarding digital assets in other developed countries, including the latest MiCA European Union legislation.

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