According to multiple reports, the Finance Committee of the Knesset convened a special meeting yesterday seeking to postpone a law regulating cryptocurrency exchanges. The original law was said to take effect on June 1 but was delayed by four months.
Recently, the Israeli Ministry of Finance, headed by Moshe Kahlon, published a draft of a regulation on money laundering that would impact financial services providers that operate in digital currencies. It was supposed to be the beginning of digital currency regulation for crypto like Bitcoin and Ethereum, and enable institutional banks to enter the field.
Jacob Enoch, head of M&A at M. Firon & Co. and Co-chair of the Israel Bar Association’s committee on Blockchain and Cryptocurrency, commented on the abrupt change;
“The last-minute decision to postpone the entry into force of the new legislation is nothing short of dramatic. There is no doubt that this decision plays into the hands of the large financial institutions, who, understandably, fear the competition that is certain to be generated by the entry into the sector of regulated Fintech companies. I am concerned that the message of instability sent by this decision could lead to stagnation in the existing Israeli Fintech industry and to inhibit the launch of new startup companies featuring innovative financial solutions. One can only hope, that such inevitable antagonism among fintech investors will not snowball into a potential loss of trust.”
Jeremy Dahan, CEO at Hello Diamonds Blockchain, protested the decision and said they feel there is deep disdain for the [blockchain] industry and its people;
“Close to 50 Israeli start-ups have already begun their preparations, and some have raised huge sums of money to do so. In our view, postponement is a sign of the unwillingness to make a decision. Israel is a nation of innovation, and amazing financial solutions that are under development can get stuck. The ball is in the hands of the Capital Market Authority, which needs to install an appropriate money laundering prohibition order, which can shorten the duration of the delay. We hope so.”
In March, the Israel Securities Authority, published a report indicating cryptocurrencies were not to be considered securities if they were not purchased as an investment. Israel, like many countries, continues to struggle with an effective regulatory approach to manage the emerging digital asset market.