The Chairman of the Israeli Securities Authority thinks Bitcoin is a bubble and ICOs ought to be regulated. Professor Shmuel Hauser addressed cryptocurrency, ICO regulation in his keynote speech at a Fintech conference in Tel Aviv on Thursday. He conceded ISA is bullish on the technology underpinning cryptocurrencies becoming commonplace in financial systems.
The professor took issue with conflating blockchain technology with initial coin offerings and cryptocurrencies which he likened to a bubble and urged urging investors to be cautious. He said:
"There's a difference between blockchain technology in general, and cryptocurrencies and ICOs. Blockchain technology is here to stay and will enter every aspect of our lives. The coins are a totally different game. It smells like a bubble. Who says that Bitcoin is worth 7000$?!"
As the Head of ISA for 6 years now, he is worried by what he sees as a new mutation of risky binary options. Still, in his speech, he highlighted ICOs as a welcomed innovation but tempered his praise by pointing at their obscurity as a loud cry for some regulation.
As a national securities regulator, Hauser and ISA are limited in scope as their jurisdiction only applies to securities. Therefore, only ICOs that meet securities' threshold will fall under regulatory purview. For now, the regulator is not out rightly banning ICOs but will instead assess regulatory requirements and legal obligations of ICOs on a case by case basis. According to Finance Magnate, he clarified
". . .we have to decide whether it's a financial tool that falls under our jurisdiction. If it's a coin and not a security, it doesn't fall under our jurisdiction. Maybe we can regulate it through corporate laws, but not necessarily by securities laws."
The ISA is not the first regulator to publicly condemn ICOs. Its part of a sweeping wave of responses to the surge in capital flows into cryptocurrency crowdfunding schemes by financial authorities spanning US, China, Hong Kong and others. In the last one year, close to $ 3 billion has been raised by hundreds of blockchain startups using this method.
Israel came under the spotlight too in September, when the ISA tasked a new committee to assess the need for new regulations for ICOs in the country with a delivery date planned for December 31st. With 40 days left until the deadline, Professor Hauser's statements hint at what to expect later in the year.