In the recently published report of the financial regulator of Israel (ISA) said that the securities may not be tokens of usefulness, which “give the right to use the product or service of a certain company” and the tokens that are used solely for clearing, exchange or payment as part of a separate project.

However, the token utility is considered a security if the cryptocurrency is not controlled by the responsible party (which may be itself a startup) and if it can be used as a means of payment outside of the project. In this regard, ISA recommends that you assess the nature of the token separately in each case. “Cryptocurrency should be considered as securities in accordance with the variety of circumstances and conditions and subject to the requirements of the law,” the document says.

At the same time ISA gave the definition of securities, or “investment” tokens: they give the holder a further inflow of funds and give “the rights of ownership, participation or membership in a particular enterprise”. The key difference between the token value and a token-a valuable paper in that the latter can be traded in the secondary market. In turn, the token of the utility presupposes the existence of a platform for his appeal (not a promise to create this platform in the future, what do tocancel format SAFT, has already attracted the attention of SEC).

To develop specific rules in this area, the ISA proposes to establish a regulatory sandbox, which will provide technology development and enforce laws. Amitay Molko, co-founder of the Jerusalem-based company JLM Blockchain, said in a conversation with Coindesk: “the Israeli regulators show that take this very seriously and fairly. This is the first step in the right direction.” At the moment the document is on consideration at the Chairman of the ISA Anat Guetta.