Israel’s securities regulator has said that cryptocurrency-related firms may not be listed on the Tel Aviv Stock Exchange (TASE) indices.
According to an announcement from the Israel Securities Authority (ISA) on Wednesday, the watchdog said it will bar the entry of public companies who mainly hold, invest in or mine cryptocurrencies from the indices, citing high volatility as a risk for passive investors whose portfolios track the indices.
Crypto-asset firms can still be traded on the exchange itself, however.
The ISA said the the move comes after it had noted significant stock price swing upon announcements of public companies’ involvement in cryptocurrencies.
The authority said:
“In some cases, the companies’ reports (about cryptocurrency) led to a sharp rise in the share prices, even before they have real activities. The extreme volatility of trading in cryptocurrencies is also reflected in the trading in these companies, whose value rises and falls sharply, sometimes for no apparent reason.”
As such, the ISA indicated that the new rule is intended to ensure that passive investors will not be exposed to these public companies unless they actively choose to. The restriction will last for one year initially, subject to further examination at a later date.
The new policy also comes as a result of months-long consideration over possible measures to limit the effect of firms’ blockchain pivots on public stocks and stock investors. The topic first emerged in December of last year, when the authority’s chief proposed banning public companies on TASE from trading cryptocurrencies.
Elsewhere in the announcement, the ISA also noted that an interim examination report on initial coin offerings (ICOs) is expected to be published in coming days, following the establishment of a committee last August to provide recommendations for oversight of token-based fundraising activities.
Through a separate notice the same day, the ISA also warned the public on the risks of investing in ICOs, as they issue misleading or fraudulent promises of high investment returns. It further highlighted that ICOs “may be considered as a public offering of securities,” which, the agency stated, must be registered with Israel’s Securities Law.
TA index image via Shutterstock