Cryptocurrencies | Photo: Shutterstock August 6th, 6:43pm August 6th, 6:43pm
Shay Klein
Digital currencies
The Securities Authority has confirmed: Exchange members will be able to provide crypto trading services for the first time. In recent years, the cryptocurrency market has undergone quite a few developments and fundamental changes in the way in which activity is done in cryptocurrency. We are witnessing more regulated entities entering these areas alongside more customers seeking to transfer funds originating from this activity to their accounts.
In the world, and accordingly also in Israel, in recent years various moves have been made by the financial regulators to regulate various components in the provision of services in virtual assets with the aim of reducing the risks involved. The entry of regulated players into the field of cryptocurrency is important in order to reduce the risks associated with unregulated activity in the field of virtual assets. Among other things, the Israel Securities Authority approved a few months ago for the first time the submission of prospectuses of mutual funds that will invest in futures contracts on cryptocurrency.
Now, as mentioned, the Authority has taken another step in the field of regulating crypto-graphic currencies and approved an amendment to the stock exchange’s bylaws, which will allow stock exchange members who are not banks to provide their clients with trading and custody services in crypto-currency.
The activity plan approved by the Authority in the stock exchange’s regulations is a “closed garden” plan. According to the outline, a customer will be able to deposit funds (Fiat Money) with the exchange member and transfer a purchase order for a cryptocurrency through the exchange member. A cryptocurrency purchase order from the customer will be executed and registered in the customer’s account with the exchange member. When the customer places an order to sell the cryptocurrency, the proceeds will be transferred to the customer’s account with the exchange member.
The activity outline is limited to services in the cryptographic currencies Bitcoin (Bitcoin) and Ethereum (ETH) and it includes additional dedicated mechanisms to reduce risks for investors and exchange members.
Expanding the circle of service providers in virtual assets to additional regulated entities is another step towards the refinement and development of the Israeli capital market with an emphasis on innovation and increasing competitiveness, while reducing risks and protecting customers.
