Countries across the globe are taking significant attempts to evaluate and expand the scope of digital assets and currencies. Various nations such as India, China, and Russia are designing systems and technology to establish a ground for the digital ecosystem. Crucially, countries are understanding the importance and need of a digital ecosystem in financial and payment settlement systems.
Israel is one of the countries that is playing an extensive and ebullient role in developing a well-regulated zone for digital assets. It brought various research studies to understand and draft policies for relations. Also, it took numerous initiatives to promote and foster the ecosystem.
Recently, the Tel Aviv Stock Exchange (TASE) and Israel’s Finance Ministry completed the proof of concept phase for a digital Israel Bond traded on a dedicated blockchain platform, the TASE. The collaboration between the TASE and the Finance Ministry’s Office of the Accountant General “marks a significant milestone in revolutionizing the settlement and issuance processes in traditional capital markets,” the TASE highlighted.
The completion of the Proof of Concept (PoC) phase for Project Eden, is showcasing the immense potential of innovative technologies such as DLT, smart contracts, and tokenization in reducing risk and improving efficiency and transparency in the financial markets. This joint effort marks a significant milestone in revolutionizing the settlement and issuance processes in traditional capital markets.
The Ministry of Finance issued and minted the first dummy digital governmental bond on a blockchain-based platform as an ERC-1155 Security Token using a dedicated decentralized app (dApp) developed leveraging web3 solutions specifically for this PoC. The blockchain used for this PoC was EVM-compatible, enabling potential integration with other blockchain solutions in the future. The event was attended by numerous banks including Deutsche Bank, Goldman Sachs and JP Morgan.
Project Eden is a unique project led by TASE in close partnership with the Israeli Ministry of Finance. The collaborative team has dedicated substantial effort and expertise to examining the application of blockchain infrastructure in the issuance and settlement of digital government bonds.
Project Eden introduced a digital Payment Token as a fundamental component of the settlement process. Utilizing smart contracts and the ERC-20 token standard, the Payment Token represented one Israeli Shekel within the Eden ecosystem. The Eden system was constructed in this configuration to facilitate the settlement of security tokens against various digital currencies, potentially including central bank digital currencies (CBDCs).
TASE and the Ministry of Finance together embrace cutting-edge technologies to upgrade capital markets and make them more accessible and efficient. Through Project Eden, TASE and the Ministry of Finance have laid a strong foundation for future advancements and innovations in the financial industry.
In October 2022, TASE proposed its entry into the crypto world. TASE while announcing its strategic plan for the years 2023-2027. Four strategic goals were listed in the plan and one of them counted in the creation of a platform for digital assets using blockchain (DLT) and venturing into crypto.
Also, in Israel’s Ministry of Finance, to issue backed digital assets, including stablecoins, and provide financial services through them, the guidelines call for the establishment of a new regulatory framework that includes licensing authority and oversight.