A series of “recommendations designed to dispel uncertainty and strike a balance between technological innovation and the protection of the investors” has been issued by the Israel Securities Authority (ISA) Committee for the Examination and Regulation of Initial Coin Offerings (ICOs) this week, in a report. The authority has been studying whether or not digital currencies such as Bitcoin should be considered securities.  This decision has a major impact on future regulations of the currency.

“As a general rule,” the ISA Committee shares, “cryptocurrencies that are designed to be used exclusively as a medium of payment, clearing, or exchange and are not limited to a specific venture; that do not confer additional rights; and are not controlled by a central entity — will not be deemed securities.”

Many analysts believe this decision may be a precedent-setting decision, as countries around the world are trying to figure out how to classify digital currencies. Israel has stood out as a leader in this regard, with a pretty hands-off approach when it comes to regulation of digital money. Bitcoin ATMs in the country, in contrast to those in the United States, do not require basic customer identification. One can put in fiat and receive Bitcoin.

The released report explains, “The question of whether a cryptocurrency should be considered a security will be decided on the totality of the circumstances and features of each case in accordance with the purposes of the law. As a general rule, cryptocurrencies that confer rights similar to the rights conferred by traditional securities such as shares, bonds, and participation units, will be deemed securities. In contrast, cryptocurrencies that represent rights to a product or service and are acquired solely for the purpose of consumption and use, and not for investment purposes, will not be considered securities.”

Recommendations were given to ISA Chair Ms. Anat Guetta. The new Chairwoman has been treating Bitcoin in a rather hostile manner.  She explains, “We have decided to prevent the exposure of passive investors to companies whose main activity involves cryptocurrencies. Investment in these companies is high risk, speculative and volatile. We also published a detailed warning to investors about the dangers of investing in cryptocurrency.”