Israel should look at the explosion of cryptocurrencies as an opportunity to develop an international financial center for so-called initial coin offerings, the head of the country’s securities market regulator said.
What’s needed is sympathetic “and even daring” regulations to help foster digital sales, Shmuel Hauser, the head of the Israel Securities Authority, said Monday at a conference near Tel Aviv. Even so, the new market is so explosive that Israel must set controls, he said. “The quest for investments in bitcoin reminds me of the 19th century gold rush.”
Public interest in digital assets has exploded this year, spurred by technology innovation and diminished trust in governments and central banks after the financial crisis. As bitcoin soared above $11,000 from its 2016 close of $952, the largely unregulated trading has drawn increasing calls for rules to protect investors and safeguard governments from losing tax revenue.
Yet many countries remain divided on whether or when to develop cryptocurrency policy. In the Philippines, the central bank’s Governor Nestor Espenilla said it’s in talks with the nation’s Securities and Exchange Commission on ways to oversee ICOs, in which companies raise funds through the sale of digital tokens.
Skepticism on cryptocurrency in Israel
In the U.K., according to the Telegraph newspaper, ministers are launching a crackdown on virtual currencies amid growing concern it is being used to launder money and dodge tax. And in Israel, there was some skepticism about Hauser’s ideas.
“The vision of Israel becoming an international hub is wishful thinking that stems from Israel’s technology abilities,” said Yaniv Pagot, chief investment strategist at the Ayalon Group, an institutional investor. “I don’t think there are enough people in Israel ready to give a kosher stamp for something like this yet.”
In his comments, Hauser was referring to the rapid influx of fortune seekers to sites of newly discovered gold deposits in the western U.S., Australia and Canada in the 1800s. While blockchain is a legitimate technology that should be adopted to cut costs to investors, bitcoin is a means of digital payment that appears to have “gotten out of control,” said Hauser, who will be leaving the post early next year. His speech was sent to journalists by email.
Israel has yet to set a cohesive policy for cryptocurrencies. The Israel Tax Authority has deemed bitcoin a taxable financial asset, and the central bank has warned the public about risks associated with investing the commodity.