🇮🇱Israel Proposes All Crypto Are Securities

Happy new year, Rainmakers! 🎊

As always, we have two captivating topics for you to dive into:

1️⃣ 🇮🇱 Israel Proposes All Crypto Are Securities

2️⃣ 🎨 Freeport is Tokenizing a Collection of Fine Art!

Without further ado, it's time to…

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🇮🇱 Israel Proposes All Crypto Are Securities

The Israel Securities Authority (ISA) proposes new legal definitions for digital assets that would place most of them under government supervision as securities. The ISA’s proposal aims to clarify the industry and protect investors while allowing for blockchain's unique advantages. However, in doing so, they are classifying the majority of digital assets as securities.

This doesn't come as a shock as the Chairwoman of the ISA has always made it clear that she does not see much distinction between cryptocurrencies and securities. In an interview with CoinDesk last year, when asked if bitcoin and other cryptos were securities, Guetta stated,

The ISA's proposal aims to achieve the "double value" of responding to the risks associated with investing in digital assets while also giving the authority the means to adopt the regulation.

The ISA has established multiple committees over the past several years to examine and regulate the issuance of cryptocurrencies and promote the development of digital markets in Israel. The latest committee was tasked with reviewing the authority's policy on investment products in digital assets.

The proposed amendments to the country’s laws would define digital assets as digital representations of value that are used for financial investment, and that can be transferred using a distributed ledger. These assets would be added under the existing category of “financial instruments” in Israeli securities law.

This comes on the heels of the Ministry of Finance’s publication of recommendations for regulating digital assets in November. The Ministry of Finance and Israel Securities Authority is aiming to advance Israel’s foray into the sector and is succeeding with over 150 companies operating in the blockchain industry.

Existing securities laws can already regulate some digital assets activity, but the ISA argues that these regulations can be challenging to apply as currently written. By establishing a new legal structure for digital assets, the ISA hopes to provide more clarity and ensure that an authority regulates the assets.

The proposal includes:

1️⃣ An amendment to the definition of the term "securities" to include "digital assets" used for financial investment and a definition of "digital assets" as a digital "representation" of value or rights used for financial investment.

2️⃣ Power to oversee the digital asset industry, including setting requirements for issuers and intermediaries and imposing sanctions for non-compliance.

3️⃣ A requirement for issuers of digital assets to publish a prospectus-like document before the issuance or registration of the assets for trading.

Investor protection is prioritized by requiring intermediaries in the digital asset industry to comply with rules similar to those applied to intermediaries in the traditional securities industry, such as the requirement to hold a license and meet capital adequacy standards. Areas to address the unique features of digital assets, such as the ability to use smart contracts and the potential for tokens to have multiple functions, were also mentioned.

The regulators in Israel aim to facilitate the development of the digital asset industry in Israel by establishing digital asset exchanges, enabling the use of digital assets as collateral, and outlining the risks associated with digital assets. The proposal is open for public comment until February 12th and, if approved, would go into full effect after a six-month period.

By the way, Security Token Advisors now offers Remediation as a Service! If you believe your crypto or token may be a security and want to correct it before the SEC comes knocking, STA may be able to help. Contact Head of Consulting Alec Beckman ([email protected]) for more information!

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🎨 Freeport is Tokenizing a Collection of Fine Art!

Freeport is a tokenized art platform that aims to make fine art more accessible and inclusive by allowing users to buy, collect, and sell exclusive art pieces at a fraction of the total cost. Through tokenized equity backed by tangible assets, Freeport will enable users to own a piece of some of the rarest art in the world.

Fine art has historically been one of the most challenging asset classes to own. It requires a significant amount of money to purchase a single piece, and it can be challenging to find and access truly valuable pieces.

In addition, art ownership often requires a high level of expertise and knowledge to properly evaluate and care for the pieces. This has made fine art largely exclusive to the wealthy and has kept it out of reach for the average investor.

The concept of a freeport dates back to the 9th century BC when freeports were established as high-security facilities to store high-value goods without paying customs duties or tariffs.

However, unlike historical freeports, Freeport aims to provide "ownership for all" by making fine art ownership more accessible and inclusive for all interested parties. By tokenizing fine art, Freeport allows users to own a piece of some of the world's most valuable art at a fraction of the cost rather than paying the total price for the physical artwork.

Freeport utilizes web3 and blockchain technology to digitize and expand the stored value of an asset, leading to increased liquidity, cost efficiency, programmable compliance with regulations, and increased transparency. The platform also offers increased security through smart contracts and the immutability of the blockchain.

Freeport will be tokenizing some of the world's most iconic and expensive art pieces. With a focus on museum-quality works, Freeport will feature selections from renowned artists such as Andy Warhol. These works are beautiful and coveted by art collectors and tend to appreciate in value over time. The value of fine art has been known to increase at a rate of 9.7% per year, according to a study by Hiscox.

This makes purchasing a piece on Freeport a way to own a stunning work of art and potentially a smart investment. Freeport will officially launch in Spring 2023 and already has a 350+ person waitlist.

Interested users and investors can sign up for the waitlist here to stay up-to-date on launch details and opportunities.

If you haven't already, check out our Security Token Show's 107th episode, which specifically covers fractionalized art!👇

💦 What else is Drippin’

Welcome back to The State of Security Tokens!

This year's edition is all about the biggest moves in the institutional adoption of tokenized assets, and let me tell you, it's MASSIVE. We've got all the heavy hitters you'd expect, like KKR and JPMorgan, but also some exciting new players like AllianceBernstein, Figure & Provenance, and Regulated Liability Network (RLN).

Trust us, you won't want to miss this deep dive into the world of institutional security tokens. So sit back, relax, and get ready to be wowed by all the action in The State of Security Tokens 2023 - Institutional Edition.👇

Everything in this report is for informational and entertainment purposes only. Nothing in this report should be taken as financial advice or as an inducement to purchase or sell any security. Nothing in this market report should be used as legal advice. Always do your own research before making any decisions regarding financial transactions of securities.

Disclosures:

• No money or other consideration is being solicited, and if sent in response, will not be accepted;

• No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is filed and only through the platform of an intermediary (funding portal or broker-dealer); and

• A person’s indication of interest includes no obligation or commitment of any kind.