Tel Aviv Stock Exchange mulls allowing non-bank members to offer digital asset services

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Israel’s sole public equity trading platform, Tel Aviv Stock Exchange (TASE), says it is considering giving Non-Banking Members (NBM) the option to offer digital currency services to their clients.

Announcing the latest development, TASE said the proposed move is designed to advance and develop the country’s capital market. The proposal has been opened for members of the public to share their opinion on the matter before final approval from the exchange’s board of directors.

Details from the proposition show that non-bank entities would have to satisfy the requirements of having a licensed digital currency service provider and a firm duly authorized to provide custodial services. Flowing from this, the proposal precludes non-bank entities of TASE from providing digital currency trading services directly to their clients.

Customers seeking to purchase digital currencies must create an omnibus account with their preferred NBM and deposit fiat currency. Upon satisfaction of this requirement, the NBM will execute the purchase using the client’s funds with custody of the assets with an authorized custodial service provider.

“When the customer gives the order to sell the cryptocurrency, the provider of trading services 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,” read TASE’s proposal.

TASE notes that the proposal is borne out of the need to satisfy Israeli investors’ growing demand for digital currencies. In achieving this, the exchange reiterates that protecting investors remains a priority and aligning local regulation with global rules is the most viable option.

TASE has been experimenting with blockchain technology since 2022 and is considering setting up a digital asset trading platform. TASE CEO Ittai Ben-Zeev stated in a policy document that “the next five years is a critical window of opportunity” for the exchange to ride the technological wave.

Merging digital currencies into Israeli laws

As digital currency adoption continues to climb, regulators are keen on issuing new rules to effectively monitor the industry. The Israel Security Authority (ISA) hinted that it would tweak the clauses in three financial rules to include digital assets.

The ISA said the changes would place digital assets in the realm of financial instruments, giving the securities regulator the right to monitor and supervise the sector. It also disclosed that the primary purpose for the changes is to milk the myriad benefits of digital assets while keeping inherent risks to a minimum.

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