Israeli Ministry of Finance Orders Promotion of Cryptocurrency Supervision
The Israeli Ministry of Finance has ordered the promotion of supervision cryptocurrency services.
The Israeli Ministry of Finance has published a draft of the Money Laundering Prohibition Order on financial services providers in virtual currencies as part of their efforts to complete the legal framework for activity in digital currencies.
The Ministry stated in its explanatory notes of the draft:
“The definition of a service in a financial asset that comes to replace and expand the term 'currency services' includes all the activities and services performed in financial assets through a business that does not involve granting credit. The intention is to enable the supervision of financial services, other than tangible assets or standard financial means, in an area that has been developing in recent years.”
The publication of the draft decree received a favorable response.
Yishai Trif, CEO of Moneynetint, an international payments provider, commented:
“In order to complete the legal framework for activity in virtual currencies, clear instructions are required regarding the prevention of money laundering and the financing of terrorism. The statement that the area is not regulated is repeated as part of the banks' automatic refusal to provide services for those who trade in Crypto. Because of this, the steps taken are important and necessary. They provide regulatory certainty to banks and financial institutions and define clear rules on what is permitted and what is not.”
The Israeli regulator says Bitcoin is not a security
In March, the Israel Security Authority (ISA) declared that cryptocurrencies are not securities after a special security committee tasked to review the status of initial coin offerings (ICOs) concluded that digital assets do not qualify as securities when utilized as a means of payment or for consumption without any rights involved.
“Cryptographic currencies that confer rights similar to those of traditional securities such as stocks or bonds will be considered securities. In contrast, cryptographic currencies that embody a right to a product or service and are purchased solely for consumption and use, will not be considered a security, but only if the purpose of the actual purchase was not for investment.”
“Such investment incurs many exceptional risks, including an absence of liquidity and ability to convert the currencies to money, exceptional price volatility, illegal activity, and risk of fraud.”