First Israeli Digital Currency Incubator Opened as Israel Moves to Regulate 'Bitcoins'

Israeli businessman and partners launch blockchain incubator as ISA seeks to regulate digital currencies

FILE - In this Thursday, March 20, 2014, file photo, Christopher David uses a Robocoin kiosk to sell bitcoins outside of the 500 Startups' Bitcoinferance in Mountain View, Calif. A civil war between the techies that run bitcoin could cause significant disruption of the digital currency by the end of July 2017, possibly leading to wild price swings, transaction delays and even outright losses. It's all about differing visions over whether and how quickly to adapt bitcoin for wider use in commerce, as opposed to merely serving as a speculative asset like gold. (AP Photo/Jeff Chiu, File)
Bloomberg

A group led by Israeli businessman Moshe Hogeg is launching an incubator specializing in blockchain and digital currency companies. The move comes as Israel's securities regulator took initial steps at regulating the nascent market.

The new hub, named Alignment, will accompany startups and more mature companies seeking to enter the field or conduct an initial coin offering. In an initial coin offering a company uses blockchain technology to raise money from the public, which receives currency units in exchange.

Investors hope the currency will take off and generate profits. Blockchain is the primary platform for digital assets, and includes a ledger of all transactions.

Blockchain technology creates an electronic record keeping and transaction processing system that allows all parties to track documentation through a secure network, without third-party verification. This contrasts with the present cumbersome and lengthy paper-heavy process.

While the field still lacks any regulation, some $1.5 billion was raised in initial coin offerings this year alone.

Meanwhile, Israel Securities Authority chairman Shmuel Hauser launched a committee to examine regulating digital currency launches. Among other issues, the panel will consider whether digital currencies available for public sale and trade should be subject to security law.

It is expected to draft policy recommendations. This comes after similar reviews by regulators in Singapore and the United States. The head of the ISA’s corporate division and its lead economist will lead the panel.

The committee seeks to balance the needs of innovation and of protecting the public.