Israel’s regulator teases comprehensive crypto framework at ICC

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In his monthly crypto tech column, Israeli serial entrepreneur Ariel Shapira covers emerging technologies in cryptocurrency, decentralized finance (DeFi), and blockchain, as well as their role in shaping the 21st century economy.

While regulation is always a hot topic for the coding scene, it’s always interesting to peek behind the curtains and learn how the people who write the rulebook view the state of the game. In late May, crypto enthusiasts and businessmen in Israel had the opportunity to do so while participating in the annual Israel Cryptocurrency Conference, which will be held from May 23-25.

One of its committees was attended by Ilan Gilden, chief economist and strategic advisor at the Israel Securities Authority. Gilden joined other prominent panelists, including Maya Zahavi of the Hidden Venture Fund, and Jonathan Schick of Oz Finance, to share his thoughts on DeFi’s future prospects. This is where he revealed that a whole group of financial authorities in Israel were preparing a comprehensive and comprehensive regulatory framework for digital assets. He said the document was to come in the near future, and the forces that were looking to promote the growth of the crypto industry in Israel in a responsible and compliant manner.

Now, any Israeli will tell you that “near future” here can mean between a few weeks and a few years, the latter being more likely. However, some in the audience may have been curious to hear about the upcoming rulebook, and Elan’s acknowledgment that some of the unique features of cryptocurrency are indeed valuable. Crypto winter will show which one, he said, since the DeFi space also has its fair share of hot air, too.

Crucially, he also pointed out some of the main concerns that regulators might target. When the code is legal, someone should honestly explain it to those in the know, he said, also referring to stablecoins as the “glass ceiling” of the crypto industry — an understandable concern given the recent Terra crash and the response it has produced from the authorities.

We don’t need the Israeli authorities to ask us to conduct code audits, Maya responded again, assuring that the industry is taking its own steps toward regulations and good practices. This was indeed the feeling I received from many of those present. As regulators scramble to take their first steps, the industry is already figuring out its own ways and standards, moving at the pace of business, not government. Yet more came with a different plea: give us certainty, of any kind, the better. And they weren’t wrong.

Related Topics: DeFi: Who, What, and How is Regulation in a Borderless and Token-Governed World?

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The Israeli authorities have a completely contradictory relationship with digital assets. A year ago, the country’s central bank, the Bank of Israel (BoI), was testing a blockchain-based digital shekel based on Ethereum — a separate private fork, according to reports at the time. The authority has a positive view of a digital national currency, as it revealed in May 2021, considering that the prospect will be beneficial to the Israeli economy. Later, in November, Bank of Israel Governor Amir Yaron told Reuters that the body was stepping up its research efforts into the digital shekel and that the country was looking to lead the push toward central bank digital currencies.

The possibility seems reasonable indeed. The blockchain scene in Israel is teeming with innovation, so it would make sense for the country to lead the task in this area: from adding flexibility to the payments infrastructure to helping the government dump cash in efforts to tackle the problem of the shadow economy, as the Bank of Israel rightly stated in its own report. . More importantly, it will put the nation at the forefront of the digital economy and attract foreign investment, allowing the country to serve as a testing ground for the new financial model.

Related Topics: US Central Bank Digital Currency Commentators Divided on Interests, United in Confusion

According to Maria Luisa Heim, Minister of Economy of El Salvador, who also spoke at ICC 2022, this is exactly what happened with El Salvador after Bitcoin was adopted as legal tender. The country has attracted innovative companies looking to test their products with a focus on greater regional expansion, she told attendees, and welcomed them to join. Israel can do the same for the greater Middle East, offering a new generation economy powered by a robust and resilient blockchain infrastructure. It could also give Israel another common ground to explore with other forward-thinking countries in the region, such as the UAE, which is also testing blockchain, and increasing its regional integration.

However, the Jewish state is not exactly present at this point, and despite the investment board opening up to the digital shekel and directing banks to open

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