Cryptocurrency-Centered Companies Need Regulation
Cryptocurrency-centered companies are now in the process of being banned by Israeli regulators from participating on Israel’s stock exchange. The Israeli Securities Authority thinks that bitcoin is a “bubble”. They also believe investors are currently not shielded from the risks of the largely unregulated and volatile crypto-market. Therefore, the proposal to ban cryptocurrency-centered companies from Israel’s stock market will be presented to the ISA board at the Calcalist business conference.
This move is quite interesting considering that the Bank of Israel has been thinking about launching a state-backed digital currency. One of the motives behind this move is to be able to record/document cryptocurrency transactions completed using cellular phones in order to curb tax evasion. Governments worldwide have been trying to develop a better system to collect taxes on cryptocurrency.
Developing a Cryptocurrency Regulatory System
Chairman of the Israel Securities Authority (ISA), Shmuel Hauser, is seeking to make modifications to stock exchange bylaws. More than likely, these changes could prevent cryptocurrency-centered companies from trading on the stock exchange, at least for now. Currently, there might only be a handful of companies (Blockchain Mining and Fantasy Network) that could be affected.
Usually, when companies reveal that they are going to be entering the cryptocurrency market, the price of their shares goes up dramatically. This was also the case with Blockchain Mining (formerly known as Natural Resources) when its share prices skyrocketed by 5000%. Blockchain Mining used to mine iron and gold but now intends to mine cryptocurrencies as well. Another Israeli company, Fantasy Network Ltd., also saw its stock price essentially double after it announced that it was bringing a blockchain specialist onboard.
ISA chairman, Mr. Hauser, stated that cryptocurrency-centered companies should not be allowed to trade on Israel’s stock exchange until a suitable regulatory system for these companies is developed. This seems fair and reasonable considering that billions of dollars have been stolen from cryptocurrency investors. Israeli regulatory authorities might just be acting in the best interests of investors.
Lou Kerner, who works with CryptoOracle, an experienced crypto trader and investor, said, “[Governments] can either roll out the red tape or roll out the red carpet – and they roll out the red tape at their own peril. So, it turns out, these [Cryptocurrency-centered companies] will go somewhere else. And the Tel Aviv Stock Exchange loses out. It’s like saying, ‘We won’t allow Internet companies to trade.’”
Kerner makes a pertinent point here because governmental regulations on cryptocurrency activity have caused people to look elsewhere or find alternative ways to get things done. For example, after the Chinese government tried to ban ICOs and centralized crypto exchanges, cryptocurrency activity still rose significantly due to a lot of peer-to-peer crypto trading.
While the Israeli government, and world governments in general, may try to restrict the activities of cryptocurrency-centered companies, several questions arise. How sincere are governments in protecting the financial resources of their citizens? Do they perceive the cryptosphere as a threat to their monopoly over money? It seems like nobody has the complete answer to these pressing questions right now, and only time will tell.