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Tel Aviv Stock Exchange Proposes Allowing Crypto Trading

The Tel
Aviv Stock Exchange (TASE) has become another traditional trading floor to hop
on the accelerating cryptocurrency wagon by allowing customers to transact
digital assets. On Monday, TASE started a public discussion on draft rules to
approve Non-Banking Members (NBMs) to trading cryptos.

The
proposed structure allows customers to deposit fiat money for investment in
cryptocurrency, which licensed providers will trade. The Non-Banking Members
will act as intermediaries between the customer and the trading and custodial
services providers. When a customer places the order to buy or sell
cryptocurrency, the purchase or sale will be executed using the deposited funds
and recorded in the customer’s account with the NBM.

TASE notes
that the cryptocurrency market experienced significant turmoil in 2022, which
affected the decline in activity in the sector and increased regulators’
oversight. The exchange sees the need to regulate the industry to allow it to
continue its dynamic growth and greater involvement from retail and
institutional investors. Bringing cryptocurrency trading to regulated exchanges
can help reduce the operational, legal and cyber risks directly associated with
cryptocurrency trading.

It is
another step into crypto trading on TASE after October’s publication of a five-year
strategic plan between 2023 and 2027 which aims to develop a blockchain
platform
for offering crypto exchange tools and services. More than a
year ago
, the New York Stock Exchange, NYSE, announced its plans to launch own markets
for trading cryptocurrencies, including NFTs.

“TASE
will promote the implementation of innovative technologies, including DLT,
tokenizing of various classes of digital assets and smart contracts,” the
press release of the stock exchange stated.

TASE’s MAYA
system posted a proposal for public comments on Monday. The proposal will be
submitted for approval by the TASE Board of Directors after public feedback.

Crypto Regulated Like
Other Assets

Last
November, the Chief Economist in the Ministry of Finance published
a report titled
“Regulation of the Digital Assets Sector – Roadmap to
a Policy.” The report was a result of a comprehensive study involving all
financial regulators in Israel, including the Capital Market Authority, Israel
Securities Authority, and the Bank of Israel.

It suggests
that the current regulatory approach in Israel and some other countries are to
regulate financial activities or services in digital assets similar to non-digital
assets while considering the sector’s unique characteristics.

“Establishing
a broad framework for digital asset regulation that allows for prudent risk
management is crucial for minimizing the potential damages to investors and to
the market as a whole, in addition to capturing the potential opportunities
presented by the digital asset market in the long run,” the report
commented.

Project Eden to Issue
Digital Gov Bonds via TASE

Before
announcing its multi-year strategy to offer crypto trading, TASE announced its cooperation
with the Ministry of Finance to implement solutions allowing the issuance of
government bonds using blockchain
. A pilot project ‘Eden’ will leverage the
expertise and technology of cryptocurrency firms Fireblocks and VMware to issue
digital gov bonds.

Currently,
a Proof of Concept (PoC) for clearing digital bonds is carried out by a joint
team from the Israeli Ministry of Finance and TASE. The solution is anticipated
to incorporate distributed ledger technology (DLT), tokenization, and smart
contracts.

According
to TASE, the reason for initiating the project was the emergence of DLT
technology and independent test performed on Central Bank Digital Currency
(CBDC) issuance by other central banks and governments. Iran, Canada, and the
United Kingdom, among others, are working on introducing their own CBDCs.

The Tel
Aviv Stock Exchange (TASE) has become another traditional trading floor to hop
on the accelerating cryptocurrency wagon by allowing customers to transact
digital assets. On Monday, TASE started a public discussion on draft rules to
approve Non-Banking Members (NBMs) to trading cryptos.

The
proposed structure allows customers to deposit fiat money for investment in
cryptocurrency, which licensed providers will trade. The Non-Banking Members
will act as intermediaries between the customer and the trading and custodial
services providers. When a customer places the order to buy or sell
cryptocurrency, the purchase or sale will be executed using the deposited funds
and recorded in the customer’s account with the NBM.

TASE notes
that the cryptocurrency market experienced significant turmoil in 2022, which
affected the decline in activity in the sector and increased regulators’
oversight. The exchange sees the need to regulate the industry to allow it to
continue its dynamic growth and greater involvement from retail and
institutional investors. Bringing cryptocurrency trading to regulated exchanges
can help reduce the operational, legal and cyber risks directly associated with
cryptocurrency trading.

It is
another step into crypto trading on TASE after October’s publication of a five-year
strategic plan between 2023 and 2027 which aims to develop a blockchain
platform
for offering crypto exchange tools and services. More than a
year ago
, the New York Stock Exchange, NYSE, announced its plans to launch own markets
for trading cryptocurrencies, including NFTs.

“TASE
will promote the implementation of innovative technologies, including DLT,
tokenizing of various classes of digital assets and smart contracts,” the
press release of the stock exchange stated.

TASE’s MAYA
system posted a proposal for public comments on Monday. The proposal will be
submitted for approval by the TASE Board of Directors after public feedback.

Crypto Regulated Like
Other Assets

Last
November, the Chief Economist in the Ministry of Finance published
a report titled
“Regulation of the Digital Assets Sector – Roadmap to
a Policy.” The report was a result of a comprehensive study involving all
financial regulators in Israel, including the Capital Market Authority, Israel
Securities Authority, and the Bank of Israel.

It suggests
that the current regulatory approach in Israel and some other countries are to
regulate financial activities or services in digital assets similar to non-digital
assets while considering the sector’s unique characteristics.

“Establishing
a broad framework for digital asset regulation that allows for prudent risk
management is crucial for minimizing the potential damages to investors and to
the market as a whole, in addition to capturing the potential opportunities
presented by the digital asset market in the long run,” the report
commented.

Project Eden to Issue
Digital Gov Bonds via TASE

Before
announcing its multi-year strategy to offer crypto trading, TASE announced its cooperation
with the Ministry of Finance to implement solutions allowing the issuance of
government bonds using blockchain
. A pilot project ‘Eden’ will leverage the
expertise and technology of cryptocurrency firms Fireblocks and VMware to issue
digital gov bonds.

Currently,
a Proof of Concept (PoC) for clearing digital bonds is carried out by a joint
team from the Israeli Ministry of Finance and TASE. The solution is anticipated
to incorporate distributed ledger technology (DLT), tokenization, and smart
contracts.

According
to TASE, the reason for initiating the project was the emergence of DLT
technology and independent test performed on Central Bank Digital Currency
(CBDC) issuance by other central banks and governments. Iran, Canada, and the
United Kingdom, among others, are working on introducing their own CBDCs.

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