Israeli digital securities exchange gets preliminary green light from regulators

An Israeli start-up that aims to establish a digital ledger technology-based digital securities exchange in the country has received its first, encouraging go-ahead from the Israel Securities Authority.

In an application letter filed with the regulator on Feb. 14, Simetria had sought the ISA's approval to operate a digital bulletin board as a preliminary step in its roadmap for the eventual launch of its digital exchange. The letter noted the increasing integration of DLT technologies into market infrastructures globally, and the evolution of legislative frameworks to accommodate this innovation. 

In the case of Israel, a Memorandum of Securities Law published by the ISA in 2020 proposed legislation that would facilitate the creation of smaller-scale, innovative digital exchanges:

“The Ministry of Finance wishes to promote securities trading activities on trading platforms that do not operate on the same scale as the Tel Aviv Stock Exchange, and have unique features or designated purposes, such as trading platforms designated for sophisticated investors (such as insurance companies, pension funds, and banking corporations) or platforms that use novel technologies (such as blockchain technology).”

Simetria's letter thus asked the ISA to approve its operation of one of its products in the short-term: a "digital bulletin board" that will provide information about private firms that are raising capital in the primary market, as well as information about the securities of private firms being offered for sale by their owners (the secondary market). In the bulletin board, potential sellers and buyers would be able to publish sales and purchase indications of various kinds.

According to a report published by Israel newspaper The Globes on Feb. 17, the ISA has now swiftly approved Simetria's application request for operating the bulletin board. Simetria co-founder and CEO Ziv Keinan said that the approval brings Israel into step with those countries at the forefront of digital securities innovation globally:

“The ISA’s decision is a dramatic milestone towards the establishment of a digital securities exchange in Israel [...] Private companies will soon be able to offer digital securities to international institutional investors on Simetria's technology platform in a way that will allow them to raise capital and gain liquidity.”

Kienen's perspective has been echoed by Oded Spirer, CEO of the ISA, who has himself said that “digital securities markets are no longer in the distant future, but rather in the here and now.”

In other recent crypto regulatory developments in Israel, several lawmakers have proposed amending existing tax legislation so that digital currencies like Bitcoin (BTC) would not be subject to capital gains taxes, but be treated more like fiat currencies instead. The proposal would, if pursued, significantly lower Israel crypto investors' tax bills.