ISA Proposes Temporary Expulsion of Crypto Firms from Stock Exchange

The Israeli Securities Authority, the financial regulatory authority of Israel, today proposed an amendment to Israeli law which would temporarily limit the ability of cryptocurrency-related firms to enter the stock exchange, according to an ISA press release.

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The proposals are as follows:

1. Stock exchange indices will not include any firm whose main activity is the investment, holding or mining of Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term.

2. Securities of such companies will not be listed on the exchange, and if they are listed will be removed. Exception will be made for companies whose shareholder equity exceeds NIS 100 million, and whose financial statements have been reviewed or audited for a period of 36 months.

Shmuel Hauser, Chairman of the ISA, said: "The proposal comes against a background of irregular trading in securities, to such an extent that there are jumps of thousands of percent in share prices even before there is any actual activity from which results can be estimated. The proposal is to issue a temporary amendment, which will allow for examination and special regulation."

These drastic jumps concern the regulator because they indicate a lack of connection between share prices and real value, which could lead to shares behaving irrationally and unexpectedly. This means that there is a risk of undermining the fairness and reliability of the stock exchange, which could effect investor confidence.

The announcement says that the ISA recognises the value of cryptocurrency and Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term technology: "This field is still in its infancy and carries great positive potential for technological, financial and business innovation." The regulator has set up a committee to examine the issue - specifically, how it should be governed in terms of taxation, and prevention of money laundering/terrorism funding.

The ISA emphasises that the proposed amendments do not relate to cryptocurrency itself, which is already being examined by the aforementioned committee, "but rather the current attempts to introduce speculative activity in the cryptographic currency sector, particularly direct investment or mining of currencies in anticipation of appreciation."

The ISA is referring here to securities trading, which has already been launched on a couple of exchanges in the US and is being considered by a few major exchanges around the world. The ISA says that because there do not exist in Israel adequate laws to control such products, the stock exchange would be exposed to a popular and unstable contract, exposing investors to great risk.

The ISA requests comments from the public on the subject.