Jul 28, 2023 12:25
Israel is
now looking into decentralised autonomous organisations (DAOs) in its latest efforts
to bring the digital assets industry under its watch. DAOs are blockchain-based organisations that operate based on rules coded into smart contracts. Uniswap, Augur and
MakerDAO are top examples of such organizations.
Israel Eyes
DAO Regulation
On
Wednesday, the Israeli Ministry of Finance announced
the appointment of a multi-agency team tasked with
recommending rules for the
regulation of DAOs. The team will look at various areas of DAO regulation,
including corporate status determination and taxation.
Regulating
this type of organization will help “to create legal certainty, reduce risk
factors in activity conducted through DAOs and realise the potential for the
Israeli economy,” the ministry explained.
As part of efforts towards DAO regulation, the ministry has called on academics, civil
society organizations and other industry stakeholders to submit proposals on
various areas pertinent to the regulation of DAOs. Specifically, the ministry
wants the public to submit
materials on the nature of DAOs, their benefits over traditional corporations,
the major risks they pose, as well as advantages and threats to the
Israeli economy.
Additionally,
the ministry is calling for submissions related to registration requirements
for recognizing DAOs as legal entities, minority holder protection,
application of existing financial rules to DAOs, and money laundering risks posed by DAO activities. The public has until September 9, 2023, to put forward
their recommendations, the ministry noted.
Crypto
Regulation in Israel
In recent
years, Israel has sought to regulate the digital assets industry. Earlier this
month, Israeli lawmakers conducted a preliminary
reading for a new
bill that proposes the exemption of foreigners from capital gains taxes; that is,
taxes on profit made from their cryptocurrency activities.
In March,
the Bank of Israel proposed rules for
permitting stablecoin use in the country while managing risks and protecting
investors. The apex monetary authority also called for public comments on the
proposals.
A month
earlier, the Israel Securities Authority (ISA) also published a proposal calling for an amendment to the
applicability of the country’s securities laws to cryptocurrencies. The
securities watchdog noted that while cryptocurrencies serve as a financial
investment, they are not included in definitions found in the country’s laws.
Since
August 2017, Israel has created a least three crypto-related committees to look
into various areas of crypto regulation and adoption in the country. The first
committee, which was established in August 2017, called for a balance between
encouraging technological innovation and preserving the interests of the
investing public.
Furthermore, while the second committee worked on rules for promoting and establishing
rules for the digital asset markets in Israel, the third committee examined the ISA’s policy on investment products in digital
assets.
Meanwhile,
Israel is not missing in the global race towards a central bank
digital currency (CBDC) launch. However, Finance
Magnates reported that the Western Asia nation has tied the launch of
its CBDC, the
digital shekel, to similar moves by global economies such as the United States
and the European Union.
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This article was written by Solomon Oladipupo at www.financemagnates.com.
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