Blockchain, or distributed ledger technology (DLT) is a publicly distributed infrastructure, which enables secure transactions without the need for a trusted third party. It also holds a disruptive potential comparable to that of the Internet itself.
Israel happens to be one of the leading countries in Digital Innovation, with technological advances driving major strategic and policy actions in the Middle East and Europe, while empowering startups at the same time. When the Israel Securities Authority (ISA) announced regulatory changes to support and accommodate digital market innovation in Israel, the idea was that "these platforms will provide a complete digital value chain for investors, from the underwriting stage to settlement and custodial services,” as stated by ISA chairwoman Anat Guetta during the Open Skies Reform Capital Market Address at the 2020 Securities Conference.
As I have mentioned in previous articles, this technology is being adopted by all industry sectors due to its unparalleled capability to store the history of every transaction sent and confirmed over the network. Transactions are fully transparent and once they have been confirmed, can't be changed.
Another significant motive for DLT innovation is its extended capabilities which provide crucial impacts to different economic and social activities. It allows for reduction of operational costs, particularly by preventing fraud, error in payments, providing greater speed of transactions between government, other agencies and citizens. It also strengthens citizens' data protection.
"One benefit of digital markets, would be that anyone could open a digital account for remote trading based on technologies such as facial recognition. The user can quickly and easily access digital investment advice for any investment amount, investment vehicle, or market, at any time and from anywhere," added Guetta, also mentioning that the ISA is currently working with both Israeli and international fintech companies on this initiative.
The ISA is also taking steps to establish retail brokers in Israel based on a digital platform that will make it simple and inexpensive to trade in securities and invest in mutual funds.
"Today, the brokerage market in Israel is highly concentrated and entails high costs for retail consumers," she said. "This move will expose the stock exchange to new players, and we will be working to remove any barriers necessary to drive competitiveness."
This could be seen as a holy grail moment if more governments and sectors follow suit. In addition to enabling Blockchain-based innovation in other countries, Israel has successfully built a DLT ecosystem. There are now several Blockchain start-up firms already operating in Israel, with the intent of establishing a new age of information sharing and innovation. Blockchain and DLT could prove to be an asset, specifically in governance by not only enabling traceability of government spending but also protecting critical infrastructure, registering assets (intellectual property, wills, health data, identification) as well as reducing waste resulting from benefit fraud. Collectively, these concepts could drastically redefine governance by introducing Decentralized Autonomous Organization.
In the meantime, as we are in the thrust of technological advancements, we must still consider the legal, regulatory, ethical and technical barriers that must be tackled in order to take advantage of all the the potentials of blockchain and distributed ledger technology in government.
In Israel, as well as it should everywhere else, the question remains: "whether we, the high-tech nation, will lead this trend or lag behind?" - Anat Guetta