The Knesset, known to be Israel’s unicameral legislature, passed on Monday a bill that calls for a ban on the provision of trading on binary options from within Israel and no matter where investors are located, local news outlet Globes reported. Sponsored by MK Rachel Azaria, the legislative piece was introduced earlier this year and was referred to the Knesset in August after successfully clearing the Reforms Committee, which is chaired by Ms. Azaria herself.
The bill was approved overwhelmingly yesterday, gaining support from 51 members of the Knesset. Work on the piece of legislation began earlier in 2017 and Ms. Azaria even convened the Reforms Committee during the legislature’s summer recess to prepare the bill for upcoming readings.
During a series of hearings, it was supported by different regulators and law enforcement agencies as well as by other involved parties and was contested by Israel’s thriving binary options industry, which local media values at billions of shekels and which has come under serious media attack from a number of news outlets in recent years.
Shmuel Hauser, Chairman of the Israel Securities Authority, and the Israel Police were particularly supportive of the proposed ban on binary options trading. According to representatives of the above-mentioned organizations, Israel should stop being used as the base for an industry that has been marring the country’s reputation for years now.
What Spurred the Crackdown on Binary Options Trading?
Generally speaking, the binary options bill will prohibit the provision of trading services from within Israel. The legislative piece places binary options trading and online gambling as two very similar activities. And in similar fashion, software for binary options will still be allowed to be developed in the country, but the actual distribution of such services will be banned.
It can be said that the pending crackdown was to some extent urged by the fact that multiple software companies have transformed their businesses in recent years to eventually become brokers.
Another reason why Israeli lawmakers began working on a binary options trading ban was an announcement made by the FBI in February that they would be targeting fraudulent activities in the field and that Israel with its thriving industry was of particular interest to the intelligence unit.
FBI Supervisory Special Agent Milan Kosanovich explained back then that binary options had appeared on their radar screen after multiple complaints from defrauded individuals had emerged.
As part of its investigation, the FBI arrested in September Lee Elbaz, known to be the CEO of an Israeli binary options company, under allegations that her business had defrauded a number of clients out of millions of dollars. Ms. Elbaz was detained at the John F. Kennedy International Airport upon arriving from Israel. The binary options CEO is facing up to 40 years in jail if found guilty.
