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Israel Chapter in The Virtual Currency Regulation Review

December 2018 - Corporate & Commercial. Legal Developments by Yigal Arnon & Co.

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Earlier this year, the Israel Tax Authority (ITA) issued two circulars, one on the taxation of digital tokens and the second addressing the taxation of utility tokens in initial coin offerings (ICOs). Additionally, in March, the Israel Securities Authority (ISA) released a detailed interim report by the Committee for the Regulation of Public Offerings of Decentralized Cryptocurrency Coins (Report) (with a follow-up report due to come out around October 2018). Moreover, it is expected that before the end of 2018, legislation will come into force that for the first time will see Israeli primary legislation define virtual currencies as financial assets and mandate licensing for related services, as is later discussed in detail.

This chapter addresses the applicability of the existing legal framework in Israel to the use and trade of virtual currencies. It further reviews the significant efforts already made by the Israeli regulators to create new, or to adjust existing, legislation and regulations with regard to virtual currencies in an attempt to keep pace with the bustling global virtual currency market, and especially the booming Israeli one (an estimated US$500 million was raised in Israeli-linked ICOs alone in 2017).