Since the beginning of the year 2018, the number of blockchain startups in Israel has reportedly tripled. Data available from the Israeli Blockchain Association reveals that there are more than 200 blockchain startups in the country, positioning Israel as a leading blockchain nation.
“Israel has a good chance to strengthen its Startup Nation brand, as well as to become a Blockchain Nation. This growth is happening thanks to effective regulation and close cooperation of many blockchain startups with educational and academic research organizations,” said Gadi Isaev, managing partner of the Israeli Blockchain Association.
Israel is highly reputed as a World’s Startup Nation. Therefore, the number of blockchain startups in the country should not be surprising at all. According to the startup map released by Israeli Blockchain Association, most of the blockchain startups in the country are focussed on Fintech and core infrastructure/protocols sectors. Notably, the security sector records a large increase in the year 2018, with 23 startups.
Reportedly, despite the boost in the Israeli blockchain industry, with its unprecedented growth in blockchain startups, most of these startups tend to evade ICOs.
Generally, while ICOs have been the most popular avenues for crowdfunding blockchain startups, research carried out by Satis Group’s revealed that close to 80% of ICOs in 2017 were scams. Due to the bad press associated with ICOs, and the uncertainty that accompanies them, most startups in Israel choose to use equity financing.
Favourable Regulatory Environment
It is noteworthy that Israel’s regulators have played a significant role in facilitating a conducive environment for the development of blockchain startups. Notably, the regulators have kept pace with the rapidly evolving cryptocurrency and blockchain landscape.
In January 2018, the Israeli government released a circular on the taxation of digital tokens. The issue of taxation now fully addressed, the issue of whether cryptos are a currency or financial asset has finally been put to bed. Later, in March, the Israel Securities Authority released its “Interim Report on the Regulation of Decentralized Cryptocurrencies” as a means of regulating the industry.
In an interview with Forbes, Yael Tamar, founder of Top of Blockchain and CCO at VeganNation asserted that
“It’s true that Israel has transformed into a blockchain nation with over 200 tech startups in the field, but that alone wasn’t surprising given Israel’s track record with emerging industries. What’s more interesting is Israel’s official position on cryptocurrency and the associated regulation and taxation. Israel is working to become a leading jurisdiction globally, not only by providing the adequate frameworks for the current use cases but considering future implementations in the field,”
Due to the responsiveness of the Israeli regulators in developing favourable regulations, the Israeli ecosystem has experienced a faster startup ecosystem.
Recently, a ruling by the Israeli Supreme Court favouring crypto exchanges elevated Israel as a pioneering force cryptocurrencies adoption. The court ruled that financial institutions must not use speculative factors, such as assumptions of risk, to limit crypto companies’ access to banking services.
With a favourable regulatory environment, Israel is destined to become a leading blockchain nation.