THE US-ISRAEL LEGAL REVIEW 2019

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90 The US-Israel Legal Review 2019
ISRAEL: HI-TECH
FINTECHAs mentioned above, the Fintech field in Israel had
a quite a successful year, especially in terms of the
capital raised. Some prominent examples are eToro
(who raised $100m) and Next Insurance (83$m).
According to Start-Up Nation Central Fintech
report, we have also seen several companies who
raised together more than $440m in debt in the
first half of 2018. Some of these companies are
online lenders with the likes of BlueVine and Behalf.
These online lenders raised debt for their lending
operations, in addition to (and sometimes instead
of) raising new equity. Alongside the capital raised,
we have also seen in the past year some important
regulatory developments. First, the Israeli
parliament passed the Payment Services Law,
which replaces the Debit Cards Law of 1986. The
new law aims to regulate the contractual relations
between the payment service provider and the
client, as well as the legal protections that the client
is entitled to. This lawshall apply, inter alia, to credit
cards companies, payment applications and banks.
Second, the Israeli parliament has also passed the
Law Reducing the Use of Cash. The purpose of this
law is to set restrictions on the use of cash, in order
to reduce black capital and to fight against criminal
activity such as serious crime, tax evasion, money
laundering and terrorism financing.
BLOCKCHAINLooking at Israel’s blockchain industry, it seems
Israel has placed itself as an important hub in the
global blockchain industry. According to OneAlpha
and First Israeli Blockchain report published in
October 2018, there are over 140 companies in
the Israeli blockchain industry, engaged in various
fields such as Fintech, security, media and gaming.
In 2018, we have also witnessed a record number
of funds raised through ICOs (more than $606 in
total). However, as the price of Bitcoin and many
other cryptocurrencies crashed in 2018, it will be
interesting to what will be the impact on the Israeli
and the global blockchain industry in 2019.This year, Israel also made progress in
cryptocurrencies’ regulation in Israel. The Israeli
Securities Authority (the “ISA”) has published in
March its interimreport regarding the examination
and regulation of cryptocurrencies. According to
the committee’s conclusions, cryptocurrencies
intended solely for payment, clearing or exchange,
which do not grant additional rights and do not
belong to a specific venture, will not be considered
as “securities”. The committee also distinguished
between these “exchange” currencies, and “tokens”,
which were defined as “cryptocurrencies which
grant a right in a specific venture”. According to the
committee’s conclusions, tokens will be considered
as “securities” if they grant rights similar to those
of traditional securities, such as shares or bonds.
On the other hand, tokens that embody a right to
a product or service and are purchased for the
purpose of use and consumption shall not be
considered as “securities”, but in any case, such
determination will be made in consideration with
all the relevant circumstances and according to the
purposes of the applicable law.
ARTIFICIAL INTELLIGENCEAnother booming field in the Israeli tech industry
is AI. According to IVC Research Report, AI
companies have raised more than $1.8b in the past
year. There are currently more than 950 Israeli AI
companies, developing various AI solutions, such
as recommendation systems, chatbots, analytics
solutions, sound recognition and computer vision
solutions. Perhaps the most known company in
the field of AI (and specifically, computer vision) is
Mobileye, which was acquired by Intel for $15.3b
in 2017.
CYBERSECURITYAI, Fintech and Blockchain were not the only
prominent fields of investment and activity in
2018. In fact, as mentioned above, 2018 was the
strongest year so for the cybersecurity industry
There are currently more than
950 Israeli Artificial Intelligence
companies. AI companies have
raisedmore than $1.8b in the
past year.