Tel Aviv Stock Exchange Plans to Allow Crypto Trading for Customers of Its Non-Banking Members

The Tel Aviv Stock Exchange (TASE) on Monday (February 27) issued a draft for public comments for approval of the expansion of the authorized activities of Non-Banking Members (NBMs) to include trading in Crypto. It is the exchange's another important move for digital assets after it announced in last October the creation of a blockchain platform​.

"The proposed structure will enable the customer to deposit money (Fiat money) that are designated for investment in crypto currency and withdraw monies originating from those currencies in the following manner: the NBM will contact two functions - the first, a licensed provider of Cryptocurrency trading services, and the second, a licensed provider of custodial services for those currencies," stated in the draft.

Specifically, customers will deposit into NBM's account in traditional currency, and these funds will be deposited in an omnibus account of the NBM with the provider of the trading services. After receiving an order to purchase cryptocurrency, the trading will be executed using the funds deposited in the omnibus account and will be recorded in the customer's account with the NBM. When the customer places an order to sell cryptocurrency, the trading service provider will sell the coins and credit the NBM's omnibus account by the amount of consideration (Fiat money) received and thereafter the consideration will be transferred into the customer's account with the NBM.

The exchange noted that the cryptocurrency market has been volatile over the past year, with countries increasingly regulating the industry. Due to the rapid development of the crypto industry and the increasing number of clients participating in it, TASE believes that it is necessary to strengthen the regulation and mitigate the various operational, legal, network and other risks inherent in cryptocurrency activities.

According to a report published last November by the Chief Economist in the Ministry of Finance, which involved all financial regulators' regulatory policies for the digital asset sector, the current regulatory approach in Israel, and in certain other countries, is to impose regulation on financial activities or services in digital assets similarly to that currently applied to non-digital assets, taking into consideration the non-traditional and unique characteristics of this sector.

TASE will prioritize the regulation and advancement of cryptocurrency transactions in order to upgrade the Israeli capital market in accordance with international standards, expand areas of NBM activities, and promote greater involvement from retail and institutional investors.

TASE believed: "The alignment of local regulation with international regulation will attract more foreign investments and foreign investors into the Israeli market, while at the same time will enable the Israeli public to invest locally, through supervised institutions. This move will facilitate the development and advancement of the Israeli capital market and encourage innovation and competition, while addressing the risks that are inherent in this activity."