Israel, through Tel Aviv Stock Exchange, has drafted a proposal that will make crypto trading friendly to the set regulations. This proposal has been termed as a step forward towards the adoption of cryptocurrency in the crypto industry in Israel. Some experts however have described the proposal as a letdown.
In a nutshell, Tel Aviv Stock Exchange proposes that only vetted and authorized brokers can serve as providers in fiat-to-crypto transactions with help from licensed crypto solution providers. The exchange, in its quest to enhance user protection, has designed the mechanism to reduce and mitigate risk in the sector. The mechanism however has not been approved by the exchange’s board of directors since the public has not yet given its feedback.
Tel Aviv Stock Exchange is the only publicly listed stock exchange in Israel. The plan has already been laid out and if it passes the board of directors, it will work as follows:
First, the scheme will give Non Banking Members(NBM) Who are Israeli brokers authorized by the stock exchange more control in the proposed crypto trading framework. The exchange already has 6 authorized brokerage firms publicly listed in their roster and they include Fair Financial Technologies, UBS Securities and Meltav. The brokerage firms will play 2 major roles that is, act as a licensed crypto services provider and also as a crypto custodian. These 2 roles will enable the firms to provide services to crypto users within the stock exchange by facilitating deposits and withdrawals of fiat money for crypto investments which effectively makes the framework a closed-loop one.
During trading, users that wish to trade with crypto must first deposit fiat money to their brokerage account provided by the brokerage firm of choice. The brokerage firm will then assume the responsibility of depositing the same amount, still in fiat money, to an omnibus account at a licensed crypto exchange. When the user makes an order to purchase crypto, it is executed at the crypto exchange through the omnibus account while recording the transaction to the users brokerage account.
Sell orders on the other hand, will be sold at the crypto trading platform and the resulting amount in fiat money sent to the same omnibus account from where it is then sent back to the user’s account at the brokerage firm. The user can then use the fiat money to either make more investments in crypto or withdraw for personal use.
This framework has attracted a mixture of reactions from both stakeholders and users in the crypto market in Israel. The stock exchange has said that the framework aligns the country’s crypto regulations with the international crypto regulations therefore bolstering confidence in the growth of the sector within the country. It has also said that the closed-loop nature will kick out bad actors from business enhancing investors’ confidence and garnering the crypto industry more adoption from the citizens.
Some other experts have however, expressed distaste in the framework arguing that it will take away control from crypto users since they can not become custodians of their own coins and money essentially taking 2 steps backward. The experts state that the essence of blockchain and the technologies it bring with it is to enable citizens take back control of their affairs from the traditional financial systems and present day governments.
With each passing day, more governments and Institutions of the governments are coming up with new regulations to control the crypto markets. The authorities claim regulations make the sector safer while masses claim they want autonomy from the institutions. What are your thoughts on this regulations? Let us know in the comments section.
