Israel Believes Blockchain Has Great Potential, Signs It Will Regulate Crypto?

Israel will embrace blockchain and develop its own digital shekel. (Times of Israel)

JAKARTA – Not long ago, the chairman of the Israel Securities Authority (ISA) Anat Guetta reported that his party would collaborate with professionals to regulate crypto and fintech.

Reporting from BSC News, Israel is moving towards the long-term goal of regulating the crypto industry as the country believes blockchain technology has the potential to transform Israel's capital markets. This is a continuation of an initial announcement made two years ago, of an initiative to build a “complete digital value chain for investors.”

“We see crypto and blockchain as two separate phenomena. We see great potential for blockchain technology. Crypto activity is a separate issue that we are examining and considering how it should be monitored holistically in Israel, as it should be in other regions of the world,” Anat Guetta told Coindesk on February 14.

In addition, Guetta also admits that regulators are lagging behind in technological developments. He believes that the role of ISA as Israel's leading regulator is to balance, monitor and regulate the entire fintech space.

Israel Embraces Blockchain

Crypto assets are an integral part of the blockchain ecosystem. Israel has recognized that blockchain technology is part of financial innovation. To move forward, regulators must first embrace technology and “discuss technology” before entrepreneurs and developers on the ground, Guetta said in a speech at the Securities Conference in 2020.

“We are also the first regulatory agency in Israel — and one of the first in the world — to adopt DLT technology in its core system, the system used to deliver services to the public," added Guetta.

Israel needs regulations to give industry players a clear picture of what is allowed and what is not. In his interview with CoinDesk, he alluded to the fact that blockchain companies prefer to operate outside of Israel. The state lost these enterprises as an economy and as a state.

However, in any jurisdiction blockchain-based companies are allowed to operate. There must be a coherent and comprehensive regulatory framework to enable the agency to operate in a lawful and acceptable manner. Israel has a view set out to facilitate this.

The often impractical attempt to try to put crypto assets into a different class is a misnomer. Guetta believes that regulators should take crypto as a whole and apply regulatory oversight to it. The important thing that can be drawn from the interview is that regulation is needed both for industry players and for investor protection.