The head of an Israeli password service provider said that the proposed Israeli law classifies digital currency as securities, which would do great harm to the local password industry.

McGinnis Fenton, editor of Cointelegraph magazine, responded to a visit to Altshuler Sm Horizon's CEO Elenstek. The Tel Aviv-based company, which provides digital currency escrow and online transactions, is one of the few companies in the country to approve contact with banks.

Stryker said that Israel's current password laws and regulations are "very complicated."

He explained that the proposal at this stage is to place digital assets under the strict supervision of the Israeli regulator (ISA).

"classifying digital assets as security assets is changing everything here," he said. Stark felt that it would not be easy to implement the proposal at this stage intact, saying she was not sure whether he would be what they wanted, adding:

"you can't classify all your digital assets as securities because he will obliterate the industry."

The ISA issued a proposal in early January that would give regulators universal rights to regulate Israel's password industry.

It is looking to change the definition of securities to include "digital assets" used for investment and financial management. It clarifies the concept of "digital assets", that is, the "main performance" of data used to invest and manage their values or interests.

ISA also seeks the right to regulate the password industry, sets rules for foreign investors and intermediary services, and enforces bans on illegal practices.

Under ISA's proposal, foreign investors in digital assets are required to publish a similar prospectus before selling or applying for registration of digital assets.

The public must post and feedback on the matter by February 12.

In addition, the Ministry of Finance put forward a proposal to regulate the password industry in November last year.

Among the proposals, one would allow cryptographic service providers to operate in Israel, at least temporarily, provided they have parallel licenses from both domestic and foreign sources.

Stack said the proposal would "make life easier for some people". After all, operating other national password trading centers in Israel as a license in the country "may take nearly two, three or four years to obtain."

According to the latest ISA report in January, the agency is likely to have about 150 companies operating in the local password industry, with more than 200000 Israelis investing in password industry projects.