High peaks of volatility are constantly reached by cryptocurrencies such as Bitcoin, and several organizations around the world start to suggest that decisions should be taken, to avoid unnecessary risks. The actual Headmaster of the Israeli Stocks Authority (ISA), Shmuel Hauser, intends to block the access to the stock market for companies which activities revolves mainly around cryptocurrencies. Once his project is validated by the related executive board, not only these companies would be banned from the stock market, the latter’s rules will also undergo various changes.
The primary goal is the decision of safety
We can’t help but notice that cryptocurrencies are actually surrounded by a hype that never occurred before for any existing financial assets. An extreme volatility is one of the consequences; for example, for the Bitcoin, within the same week, the unit price peaked at $20000 before going back to $12000 only a few days after, and finally came back to $15000 after another few days. Thus, it’s very unadvised to place high amounts of money in this currency for a long time, since there’s no way to predict where the trend will go on the long term.
Also, it would be risky for any company to base their activities on such unstable asset. A startup who provides its services in exchange of cryptocurrencies would see their revenues plummeting at an exponential rate if the related currency loses its value. If Shmuel Hauser’s request is accepted, it will not be possible for companies who uses cryptocurrencies to have their stock exchanged on the Israeli market. Blockchain Mining and Fantasy Network are among the targeted companies, and their shares wouldn’t be allowed to be traded in Israel, should the decision be finally taken.
Cryptocurrencies trading is not endangered
Despite what the rumors mentioned, the Israeli cryptocurrency ban doesn’t concern the currencies themselves, but the companies using them for their activities. If you live in Israel and are trading cryptocurrencies on a daily basis, you don’t have to be afraid to see this activity labeled as illegal within the next months. By contrast, if you own stocks of a company whose main activity revolves around Bitcoin or similar, the related company might not be allowed to have its stocks exchanged on the country market.
It’s still a bad news for the related startups, and it might negatively affect the value of their shares. After all, most people would be afraid if it’s reported that some shares they own wouldn’t be available for exchange on the market anymore. Thankfully for them, the decision isn’t confirmed yet, as it has to go through various approval before it becomes an official statement.
Shmuel Hauser’s submission: will it pass?
The ban of the cryptocurrency companies from Tel Aviv market will be effective only when approved by competent authorities. So far, it’s just a project, and its instigator is even about to be replaced after his 7 years at his job. However, he claims that if he receives the approbation he expect, the reform will take place anyway, and will be led by his successor, Anat Guetta. For now, his submission has a fierce opponent: Benjamin Netanyahu, the prime minister himself.
The latter didn’t hide his interest for the cryptocurrencies, and publicly said they would replace banking institutions one day. Netanyahu said that people goes to banks mainly for safe transactions, and the Bitcoin and its friends actually succeed to fulfill this specific need. The Israeli cryptocurrency ban has thus a long way to go before being validated. And still, some companies might be safe, because the level of the authorized implication of cryptocurrencies in their activities would be yet to be fixed.