Israel Consults Public on DAO Regulation, Sets Up Special Examination Team

The Israeli government has set up a special examination team to explore the regulation of decentralized governance organizations, known as DAOs, and will be consulting the public on the matter until September, according to an official announcement.

The team, headed by the Chief Economist at the Ministry of Finance and the Head of the Corporations and Capital Market Cluster at the Ministry of Justice, will examine and consult on the uses and types of activities carried out by decentralized autonomous organizations (DAO) and the decision-making processes within DAOs.

Blockchain-based DAOs often use native crypto tokens to allow stakeholders to vote on governance issues. Israel's special examination team plans to explore the use of tokens and associated risks in these organizations to provide regulatory clarity, according to the announcement.

"The team examines the required regulation, including regarding the corporate status, the taxation aspects and other aspects of DAO in order to create legal certainty, reduce the risk factors in the activity through DAO and realize the potential for the Israeli economy," the notice said, adding that comments submitted by the public can be used to formulate the team's policy recommendations.

Israel has been pushing initiatives to produce regulations for the crypto sector that could support the growth of the industry, with lawmakers recently showing support for axing capital gains taxes for foreign crypto investors, but has followed other jurisdictions like the European Union in opting for stricter measures for certain crypto, such as stablecoins, following the high profile collapses of 2022.

The general public can submit comments on the government's plans until Sept. 3.

Read more: Israeli Lawmakers Support Axing Crypto Capital Gains Tax for Foreigners