A stock market ticker displays financial information and world time zones in the lobby of the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Aug. 4, 2016. As part of a planned overhaul to keep the bourse alive and relevant to its robust high tech-based economy, the Tel Aviv Stock Exchange plans to join most of the world on a Monday-to-Friday schedule to lure foreign traders, after 63 years of being open Sunday-to-Thursday. Photographer: Rina Castelnuovo/Bloomberg
Cryptocurrencies will not be allowed to trade on the Tel Aviv Stock Exchange © Bloomberg

Israeli authorities became the latest national regulators to crack down on cryptocurrencies, announcing on Monday they would bar companies trading in bitcoin from operating on the Tel Aviv stock exchange.

The move by the Israel Securities Agency follows last week’s warnings by the Financial Industry Regulatory Authority, Wall Street’s self-regulator, against companies that “tout the potential of high returns associated with cryptocurrency-related activities”.

Other countries — including China, whose decision to shutter bitcoin exchanges and ban initial coin offerings in September led to a sharp drop in prices — have made similar regulatory moves in recent weeks as fears grow of a bitcoin bubble.

Shmuel Hauser, director of the Israeli regulator, said a committee he has appointed to investigate how to regulate the digital currency would report back in the coming week, warning that he viewed the skyrocketing prices to be “a bubble”.

“Nobody knows what stands behind this,” Mr Hauser said of the digital currency’s rise in value. Regulation was necessary “because the public is unprotected,” he added, according to a feed of the event provided by Calcalist.

Bitcoin suffered its biggest sell-off of the year last week when it dropped more than 30 per cent to under $11,000 per coin on Friday. It has since recovered during holiday trading, but by late Monday in London it was hovering near $14,000, well off its mid-December highs of about $20,000.

Earlier in December, several Israeli companies announced their intention of delving into the bitcoin trade, moves which saw their shares soar on the Israeli market. The securities authority has since taken measures to try to curb speculation by Israeli financial companies in the digital currency.

"I think it looks like a bubble, smells like a bubble, acts like a bubble and feels like a bubble," Mr Hauser said.

Under the Israeli regulator’s plans, companies whose “principal services” are in digital currencies will not be allowed to trade on the Tel Aviv market, while those that are already listed but shift “the majority of its operations “ to bitcoin would be removed from the exchange.

Despite scepticism by the market regulator, Israeli media reported earlier this week that Israel’s central bank and finance ministry were considering the creation of a state cryptocurrency — a digital shekel — for use in cellular transactions in the country, which would allow users to bypass banks in transferring cash between individuals and businesses.

If approved, Israel would join at least three other countries — China, Japan, and Sweden — that have begun playing with the concept of an official digital currency. 

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