Web3 Israel Newsletter Special Edition #11 - Interview with Dan Kamieniecki

Dear Web3 Israel Newsletter subscribers,

While there are many news going on in the web3 world nowadays, the biggest news in Israel are happening in the Tel-Aviv Stock Exchange, and that's the reason we decided to publish another special edition, and this time, an exclusive interview with the Head of Digital Assets at the Tel-Aviv Stock Exchange (TASE) Dan Kamieniecki ! ????

Dan brings a wealth of knowledge from his prior experience as the head of strategy at TASE and from his background in the public sector. TASE, which became a public company in 2019, is a securities market located in Tel Aviv, Israel. TASE trades in stocks, corporate and government bonds, ETFs, options and futures, and a variety of other financial instruments. TASE’s wholly-owned subsidiaries also include the TASE Clearing House, the MAOF Clearing House (derivatives), and the TASE Nominee Company, which provide clearing, settlement, and securities registration services. TASE plays a primary role in the growth and development of Israel's economy.

In the recent interview conducted by our team member Yoav Tietz , Dan shed light on the viewpoint of TASE regarding blockchain and digital assets. He also delved into the latest developments TASE has made in this innovative field.

Enjoy,

Tomer Niv

Editor in Chief

Who is Dan Kamieniecki? What does it mean to be the Head of Digital Assets at TASE?

I am Dan Kamieniecki, and I'm 38, originally from Buenos Aires, Argentina. I Made “Aliyah” to Israel when I was 16. I reside in Tel Aviv with my wonderful wife, Adi, and our two adorable daughters, Emma and Tamara.

I began my career in the Israeli public sector: starting at the Central Bank of Israel analyzing financial and systemic risks. I then served as a parliamentary advisor at the Knesset (The Israeli Parliament), followed by a role at the Ministry of Finance as a Domain leader and Team Manager.

Five years ago, I decided to transition from the public sector and joined the Tel Aviv stock exchange (TASE) as the Head of Strategy. In this position, I was responsible for consolidating and implementing TASE’s business strategy. During my time in the strategy department, I've been introduced to blockchain technology and the potential disruption it could bring to our ecosystem. The technology, and the emerging asset class, intrigued me, prompting me to delve deeper into the subject.

Recognizing the significance of the blockchain and in line with TASE’s new strategic plan, TASE management took the initiative to establish a dedicated business unit within TASE— the Digital Assets Unit. As the head of this unit, I am responsible for exploring the opportunities presented by digital assets and charting a course for their integration into our organization and the local capital markets.

How blockchain technology and digital assets could disrupt the traditional finance market?

Ok, as I said, several financial institutions globally, including TASE, recognized the potential disruptive impact of this technology on traditional capital markets during the last few years. Traditional financial markets, systems, and models often suffer from various inefficiencies. Some processes require high collateral, while others are slow, intransparent, and require numerous participants.?

Blockchain technology can make many processes more efficient and transform our industry. It achieves this by utilizing technologies the web3 ecosystem takes for granted, such as smart contracts and tokenization.

To illustrate this, let's focus on the clearing and settlement processes and how those can improve significantly with blockchain. The clearing is the process of reconciling purchases and sales of securities and the direct transfer of funds from one financial institution to another. The settlement involves the finalization of the transaction and the transfer of ownership of the securities and funds.

Let’s say you purchased stocks of “company x” from me. To make this transaction happen, I need to transfer my stocks while you transfer the money. This “handshake” is executed through the stock exchange and involves an entity called a “clearinghouse”, resulting in a process that can take 1 to 3 days or even more.?

Until these processes are completed, neither you nor I will hold the money or the stocks. The clearing house assumes the risk of our transaction being canceled (or failed) during this time. This lengthy process poses risks and delays and adds to the overall cost of the transaction. Fortunately, Blockchain technology provides a solution to this problem. It enables instantaneous settlement (“atomic settlement") and removes the need to hold collateral.

This example demonstrates how blockchain can effectively address existing challenges in traditional finance. It also highlights one example of why stock exchanges, clearing houses, central banks, and governments are interested in harnessing blockchain potential and integrating it into their processes.

On the other hand, I believe that tokenization has the potential to revolutionize the way we trade and hold various asset classes. In my opinion, we are currently witnessing the beginning of this transformative revolution. Different digital assets emerge as a new asset class that individuals and institutional investors are increasingly willing to invest in.

Recognizing this trend, various financial institutions have started offering services related to digital assets. As a stock exchange and clearing house, we are committed to meeting the demands of our clients and providing them with the best value. That is why entities like SDX and BNY Mellon, among others, have already begun offering digital assets-oriented services, such as Crypto custody. These developments and solutions are not limited to cryptocurrencies alone; they hold relevance for any future tokenized asset. Furthermore, numerous other services have significant potential in this evolving landscape.

What is "Project Eden" and how TASE sees the web3 industry and blockchain technology?

TASE always actively seeks innovative projects across various domains and utilizes different technologies. Our initial venture into blockchain occurred in 2018 when we announced the Development of a Blockchain-based Securities Lending Platform. We aimed to pioneer the use of this technology in traditional finance.

As part of TASE's new strategic plan, we have expressed our commitment to creating a platform for digital assets using blockchain (DLT) and expanding our presence in the digital assets arena.

One of our notable projects is Project Eden, a joint effort involving TASE and the Accountant General office at the Israeli Ministry of Finance. We have also cooperated with tech partners such as Fireblocks and Blockfold. Through Project Eden, we have developed a system that enables many functionalities, among others:

1. It enables the government of Israel to mint and issue a tokenized governmental digital bond on a private blockchain, revolutionizing the issuing process by making it faster, more secure, and transparent.
2. It connects twelve prominent Israeli and foreign banks to this system through dedicated digital wallets. We have developed a web3 dapp specifically for this POC, ensuring the secure and direct holding of security tokens and payment tokens.
3. It leverages a blockchain-based solution to achieve atomic settlement of the auction results conducted on the Bloomberg platform. It ensures a seamless and efficient settlement process.

We’ve deployed three Solidity-programmed smart contracts: The first is an ERC-1155 token (the bond/ security token) that was minted and issued by the Minister of Finance. The second is an ERC-20 token (payment token). Lastly, we developed the TASE Bond Management smart contract that acted as an intermediary between the issuer and the investors, which ensures the verification of valid and approved tokens, preventing inconsistencies or incomplete transfers and guaranteeing the accurate transfer of tokens.

To witness the implementation of Project Eden, we organized a live event on May 31st in collaboration with our partners and the participating banks. Following this successful proof of concept, three weeks ago, we presented Project Eden results at "Money2020" in Amsterdam, a tremendous opportunity. This project has been an invaluable experience for us, the Accountant General Office, and our partners. The feedback we have received has provided essential insights for our future endeavors.

As someone leading digital assets at a stock exchange, what is your perspective on Central Bank Digital Currencies (CBDCs)? How do you see them impacting the future of finance?

Within Project Eden, we recognized the importance of atomic settlement and sought to achieve it by ensuring the security token and the payment token “digitally live” on the same ledger. To accomplish this, we created a designated payment token for Project Eden, enabling atomic settlement.

I believe that Central Bank Digital Currencies (CBDCs) have the potential to make a substantial impact on the future of finance. The Bank of Israel has conducted extensive development and strategic planning regarding the digital shekel. CBDCs offer significant value in enhancing various processes, including securities settlement and payment methods. Furthermore, the programmability of money opens up possibilities to elevate payments to new levels of efficiency and innovation.

Similar processes and initiatives are taking place in other traditional financial markets worldwide. For instance, the Swiss National Bank recently minted a CBDC on the Swiss digital exchange chain (SDX), marking a significant use case. While the complete transformation of payment, trade, and money holding may take time. Relevant regulators in Israel and globally, including the Bank of Israel, are exploring the technology to understand the added value of digital shekel.

What do you think about the SEC vs Coinbase and Binance? What do you think about all the cryptoassets the SEC claimed to be securities?

First and foremost, TASE operates under the supervision of the Israeli Securities Authority and other regulators, such as the Capital Market Authority and the Israeli Central Bank. We prioritize compliance with regulatory requirements for our current and future services.Local regulators have published papers that outline an initial framework for the crypto market, indicating their stance and direction.

The Markets in Cryptoassets (MiCA) initiative, which establishes new rules for crypto markets in the EU, is a positive step towards providing clear guidelines for entities and processes within the crypto space.

Regarding the SEC's actions against Coinbase and Binance, while the direction may not have surprised many, the timing and extent of the regulatory steps were notable. While certain practices may need to be eliminated to ensure safety and accessibility, the full impact of these measures on the crypto market and global regulators remains uncertain.As for digital assets classification as securities, it is challenging to predict which will be considered as such.?

I believe regulation plays a vital role in the future of web3. It provides the necessary framework for safety and integrity. It helps the advantages offered by the technology to be fully realized or integrated into existing financial systems. I also recognize the importance of fostering innovation and allowing technology to flourish. The recent developments in the USA are expected to address concerns while enabling the industry to grow and take advantage of Web3 technology. To scale the web3 adoption, we must find an equilibrium that promotes responsible innovation within a clear regulatory framework.

Other than web3, what else are you interested in? How else do you spend your time?

Besides my passion for the intersection of finance and innovative technologies, a few other things keep me engaged. On a personal note, I've recently gotten back into running, and I'm determined to stick with it, maybe even challenge myself to run longer distances. Another activity that brings me joy is practicing Iyengar yoga. Additionally, I love spending quality time with my family, Adi, Emma, and Tamara. They are my greatest source of joy and support ??

Meet the Team ????

Yoav Tietz is a web3 enthusiast, professionally beginning his journey as a Data Analyst at Redefine in 2022. Before that, Yoav Served 4 Years at the 8200 unit as a Product Manager and Data Analyst.

News ??

We have two exciting news for you which continue the focus on Israeli-owned web3 exchanges:

• INX Digital Company, a regulated broker-dealer, ATS, and transfer agent, has entered into an investment agreement with Republic, a global financial firm operating a digital merchant bank and investment platforms. Republic will invest $5.25 million in INX, acquiring approximately 9.5% of the company. They have also entered into a collaboration agreement to expand tokenization infrastructure and access to digital assets for investors worldwide. Additionally, Republic and INX plan to enter into a non-binding term sheet for Republic's potential acquisition of 100% of INX common equity.
• The trading and brokerage platform, Bit2C, will sell 32% of its shares to Tectona, a company in the crypto industry. Bit2C recently obtained a full regulatory license from the Israeli Securities Authority, Insurance, and Savings, and will receive 10 million NIS for the shares, resulting in a value of 30 million NIS for the company.

Community Spotlight ??

Web3 Israel is community dedicated to technology, startups and innovation in the crypto & web3 space.?Their Telegram group is very active and they mostly chat in Hebrew, with a job board, several IRL meetups a month, and a weekly Twitter Space every Sunday at 9pm (Israel time GMT+2) to talk about latest news, developments, and topics in the space. ?

Have a suggestion or feedback? Talk to us!

Web3 Israel Newsletter Team (alphabetical order):?Arthur Shkolnik,?Benny Attar,?Rea Gavriel Klayman,?Roee Hamuy,?Ruben Adhoute,?Shahar Yahav,?Tom Elia,?Tomer Niv,?Yoav Tietz