Client updates / Capital Markets

Under MiCA, a critical aspect for non-EU crypto firms is the reverse solicitation exemption. This rule allows firms from outside the EU to offer crypto-asset services to EU clients without needing MiCA authorization.

In a paradoxical twist, the Israel Securities Authority also monitors unsupervised entities, to prevent them from exceeding their operational parameters without a license. Consequently, the ISA possesses the power to request documents and information from these entities, emphasizing the importance of responding honestly and comprehensively to such demands.

Small and medium-sized corporations are a central part of the Israeli economy’s growth engine and are considered major contributors to employment growth. The Israel Securities Authority is seeking to assist these businesses in diversifying their funding sources.

The new rules will require managers of large hedge funds to disclose additional information about their activities and strategies and provide more detail about their investments, including the countries and industries in which they are invested, leverage exposures, and more. As expected, fund managers are objecting, arguing that the new requirements will lead to superfluous information overload.

The SEC approval has aroused considerable excitement, especially among people in the crypto and bitcoin industry. However, these are approvals of specific applications and not across-the-board approvals, and the SEC still considers this an unstable sector requiring investors to remain cautious.

The Israel Securities Authority imposes supervisory obligations on foreign brokers with regard to the activities of their marketers in Israel.

The SEC is taking a regulation by enforcement stance toward NFTs and is creating legal uncertainty in the field. Will the Israel Securities Authority follow suit?

The Israel Securities Authority has announced several reliefs due to Operation Swords of Iron, mainly the postponement and extension of deadlines.

Commercial information or intentions disclosed in public companies’ public statements might expose them to investigations or sanctions by the Israel Competition Authority. The tension between the reporting obligation and the desire to maintain a competitive market will be resolved only through clear guidelines issued by the regulatory authorities.

The Israeli Privacy Protection Authority recently published a draft directive that imposes the responsibility for fulfilling certain obligations on the board of directors, including the obligation to appoint an officer responsible for compliance with the Privacy Protection Regulations

After considering public comments, the Israel Securities Authority is promulgating a revised draft bill seeking to regulate the field of digital assets.

Regulation by enforcement is designing tests to ascertain which cryptographic assets fall under the definition of “security” in the wake of the XRP crypto token court ruling.

The number of companies with a decentralized ownership structure, i.e., with no controlling shareholder, has been rising in recent years, as has their share of the capital traded on the Tel Aviv Stock Exchange. The recently proposed amendment to the Israeli Companies Law aims to revise the corporate governance regulations specifically applicable to such companies. 

Law enforcement authorities in the United States are adopting a policy of lenient law enforcement measures against corporations that cooperate during investigations, document their activities, and implement compliance programs. This policy also applies to Israeli companies operating in the United States.

In order to contend with the meager supply of investment advice or portfolio management services via technological interfaces, the Israel Securities Authority has published a proposed amendment to the directive focusing on two main services: trading signal services and social trading. Both of these services rely on digital media.

The publication of the questionnaire aligns with global trends and reflects the importance of this subject for investors. According to the TASE press release, only 70 companies currently publish full ESG reports.

At the conclusion of a proceeding conducted over about two years, an Israeli court recommended that the class plaintiffs withdraw their actions in light of the legal difficulties and since there is no reasonable possibility that the legal questions will be  ruled in favor of the plaintiffs. The plaintiffs accepted the court’s recommendation, and the court dismissed in limine 66 class actions.

The draft of Israel’s Arrangements Law – Economic Plan for 2023-2024 addresses digital assets extensively for the first time. The draft bill contains a section dedicated to the regulation of digital assets and addresses stablecoins, taxation issues, the banking system, DAOs (decentralized autonomous organizations) and more.

The Israel Securities Authority recently published a proposal for a series of legislative amendments relating to digital (cryptographic) assets, whose implications go beyond the realm of digital assets and do not herald much good news for Israeli crypto ventures.

The Israel Securities Authority is seeking to expand its power. If its draft bill is accepted, this will have far-reaching consequences, as the ISA will have the power to investigate offenses related to fraud, bribery, money laundering, and cryptocurrencies (which the ISA considers to be securities).