A recent press release states that the Israeli government has established a special inspection team to investigate the regulation of decentralised governance organisations, or DAOs, and that the team will be soliciting public input on the subject until September.
The team, which is led by the Ministry of Justice’s Head of the Corporations and Capital Market Cluster and the Ministry of Finance’s Chief Economist, will examine and provide consultation on the purposes and types of activities carried out by decentralised autonomous organisations (DAOs) as well as the decision-making procedures within DAOs.
Native crypto tokens are frequently used by blockchain-based DAOs to let stakeholders vote on governance-related issues. According to the notification, Israel’s special inspection team intends to investigate the usage of tokens and related dangers in these organisations in order to offer regulatory clarification.
The notice stated that the team “examines the necessary 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 realise the potential for the Israeli economy,” and that the team could use public comments to help develop its policy recommendations.
Israeli lawmakers recently expressed support for eliminating capital gains taxes for foreign investors in cryptocurrencies. However, Israel has followed other jurisdictions like the European Union in choosing stricter regulations for some cryptocurrencies, such as stablecoins, in response to the high-profile collapses of 2022.