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Israel

A 2016 licensing law that took years to bite: Israel had 9 licensed crypto firms by mid-2026 and a shekel stablecoin bill on the table.

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9CMA-licensed financial asset (crypto) service providers
25%Base capital gains tax rate on crypto for individuals
NIS 2.5mMinimum equity for a licensed crypto custodian under 2026 CMA rules

Israel wrote crypto into law early but licensed slowly.

The Supervision of Financial Services (Regulated Financial Services) Law of 2016 treated virtual currency as a "financial asset" and required anyone exchanging, managing or safeguarding it to hold a licence from the Capital Market, Insurance and Savings Authority (CMA).

In January 2018 the Israel Tax Authority classed crypto as an asset, not a currency, so gains are taxed as capital gains at a base rate of 25%.

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The regime took years to produce licensees.

Firms that applied kept operating under a transitional permit, AML duties only applied from November 2021, and the first active broker, Bits of Gold, got its licence in September 2022 after applying in 2018.

Banks remained wary of crypto money throughout, and several customers had to go to court to force banks to accept it.

The pace picked up from late 2024.

The Israel Securities Authority let six fund managers launch Bitcoin mutual funds on 31 December 2024, the Bank of Israel published a preliminary digital shekel design in March 2025, and the CMA's licensee count reached nine by June 2026, five of them approved that year.

In April 2026 the CMA let Bits of Gold issue BILS, a shekel stablecoin, under its existing licence.

In June the Finance Ministry published a draft stablecoin law, and in July the CMA issued binding custody rules while the Bank of Israel proposed ending blanket refusals of crypto deposits.

For builders, Israel is open but licence-heavy.

Exchange and custody need a CMA licence, custodial firms need at least NIS 2.5 million in equity, and from January 2027 client assets must be held in trust in segregated accounts with multi-party approval of transfers.

Security tokens fall under the ISA.

The main questions now are whether the Knesset passes the stablecoin bill and whether banks start serving licensed firms properly once the Bank of Israel's new directive takes effect.

Who regulates

  • CMACapital Market, Insurance and Savings Authority

    In charge of

    Part of the Finance Ministry, it regulates insurers, pension and provident funds, and non-bank financial services such as credit and payment providers under the 2016 Regulated Financial Services Law.

    On crypto

    Licenses exchanging, managing and safeguarding crypto as financial assets under the 2016 law; nine firms held licences by June 2026. It approved the BILS shekel stablecoin in April 2026, issued binding custody rules in July 2026, and would license stablecoin issuers under the draft law.

    CMA website
  • ISAIsrael Securities Authority

    In charge of

    Israel's securities regulator: it oversees public offerings and listed companies, the Tel Aviv Stock Exchange, mutual funds, and licensed portfolio managers and investment advisers.

    On crypto

    Treats investment tokens as securities under the Securities Law, while pure payment and utility tokens fall outside it. It allowed six Bitcoin mutual funds to start trading on 31 December 2024.

    ISA website
  • BOIBank of Israel

    In charge of

    Israel's central bank: it runs monetary policy, issues the shekel, oversees payment systems and supervises the banks.

    On crypto

    Its AML Directive 411 governs how banks treat crypto-sourced funds; a July 2026 draft amendment would bar blanket refusals and drop the automatic NIS 100,000 source-of-funds check. It published a preliminary digital shekel design in March 2025 but has not decided to issue one.

    BOI website
  • ITAIsrael Tax Authority

    In charge of

    Israel's tax authority, part of the Finance Ministry: it administers income tax, capital gains tax, VAT and customs.

    On crypto

    Circular 05/2018 treats crypto as an asset, not a currency, so individuals pay capital gains tax at a 25% base rate unless trading is a business; miners and traders may owe VAT. A November 2024 State Comptroller audit found gaps in how it tracks crypto gains.

    ITA website
  • IMPAIsrael Money Laundering and Terror Financing Prohibition Authority

    In charge of

    Israel's financial intelligence unit: it receives and analyses reports from financial institutions on suspected money laundering and terror financing, and passes intelligence to enforcement agencies.

    On crypto

    Since the AML order took effect on 14 November 2021, licensed financial asset service providers must identify customers, keep records and file reports with it.

    IMPA website

What to watch

  • Whether the Knesset passes the Supervision of Financial Services (Issuance of Stable Digital Currencies) bill published for comment in June 2026.
  • Entry into force around January 2027 of the CMA's custody circular 2026-10-2 (segregated trust accounts, multi-party approval of transfers) and of the CMA's separate 2026 equity rules for crypto licensees.
  • The final version of the Bank of Israel's amendment to Directive 411, which would stop banks refusing all crypto-sourced deposits.
  • A Bank of Israel decision on whether to issue a digital shekel, after the design and technology consultations of 2025.

Quick answers

Who regulates crypto in Israel?

Five authorities shape crypto rules in Israel. CMA (Capital Market, Insurance and Savings Authority): licenses and supervises financial asset service providers (crypto exchange, management and custody) and would license stablecoin issuers. ISA (Israel Securities Authority): regulates security tokens, public offerings, crypto mutual funds and ETFs, and licensed portfolio managers and advisers. BOI (Bank of Israel): supervises banks' handling of crypto-sourced funds, sets stablecoin policy input and runs the digital shekel project. ITA (Israel Tax Authority): sets the tax treatment of digital assets, including capital gains on disposals and reporting of crypto activity. IMPA (Israel Money Laundering and Terror Financing Prohibition Authority): israel's financial intelligence unit, which receives reports from financial asset service providers under the 2021 AML order.

Do crypto exchanges need a licence in Israel?

Yes, though the regime is narrow or still phasing in. CMA licenses exchange and custody under the 2016 law; 9 licensees by June 2026, new custody rules in 2027. The main licences are Financial asset service licence from CMA, held by 9 as of 29 Jun 2026; and Stable digital currency issuer licence (proposed) from CMA. Four Pillars rates exchange licensing in Israel as partial (reviewed 5 Oct 2026).

Are stablecoins regulated in Israel?

Not fully yet: the regime is being built. Draft stablecoin law published June 2026; BILS shekel token approved under an existing licence in April. The most recent official text is Finance Ministry and CMA publish for comment the draft law regulating the issuance of stable digital currencies in Israel (Ministry of Finance / Capital Market, Insurance and Savings Authority, 29 Jun 2026, consultation). Four Pillars rates its stablecoin regime in Israel as developing (reviewed 5 Oct 2026).

How is crypto taxed in Israel?

Base capital gains rate for individuals. Four Pillars rates tax clarity in Israel as comprehensive (reviewed 5 Oct 2026).

Can real-world assets be tokenised in Israel?

Not fully yet: the regime is being built. Security tokens fall under securities law and the ISA; no dedicated tokenisation or RWA regime yet. Four Pillars rates tokenisation and real-world assets in Israel as developing (reviewed 5 Oct 2026).

What changed most recently in Israel's crypto rules?

19 Jul 2026: CMA issues binding custody rules for crypto firms. Circular 2026-10-2 requires client assets held in trust in segregated accounts, a register updated at least daily and multi-party approval of transfers, from six months after publication. 14 Jul 2026: Bank of Israel proposes easing crypto deposits. A draft amendment to Directive 411 would bar blanket refusals and drop the automatic NIS 100,000 source-of-funds check.

What should companies watch next in Israel?

Whether the Knesset passes the Supervision of Financial Services (Issuance of Stable Digital Currencies) bill published for comment in June 2026. Entry into force around January 2027 of the CMA's custody circular 2026-10-2 (segregated trust accounts, multi-party approval of transfers) and of the CMA's separate 2026 equity rules for crypto licensees. The final version of the Bank of Israel's amendment to Directive 411, which would stop banks refusing all crypto-sourced deposits.

Timeline

  1. CMA issues binding custody rules for crypto firms

    Circular 2026-10-2 requires client assets held in trust in segregated accounts, a register updated at least daily and multi-party approval of transfers, from six months after publication.

  2. Bank of Israel proposes easing crypto deposits

    A draft amendment to Directive 411 would bar blanket refusals and drop the automatic NIS 100,000 source-of-funds check.

  3. Draft stablecoin law published for comment

    The bill would give the CMA licensing and supervisory powers over issuers of stable digital currencies.

  4. CMA approves the BILS shekel stablecoin

    Bits of Gold may issue BILS in a limited format after a two-year pilot, under its financial asset service licence.

  5. Bank of Israel publishes a preliminary digital shekel design

    The design was released for public feedback; the Bank has not decided whether to issue a digital shekel.

  6. Six Bitcoin mutual funds start trading

    The ISA allowed Migdal, More, Ayalon, Phoenix, Meitav and IBI to launch Bitcoin-tracking funds on the same day.

  7. Finance Ministry publishes digital asset regulation report

    The Chief Economist's report recommended licensing stablecoin issuers and clarifying crypto tax rules.

  8. Bits of Gold becomes the first licensed crypto broker

    It was the first active crypto trading firm to receive a financial asset service licence, four years after applying.

  9. AML order for financial asset service providers takes effect

    Crypto service providers became subject to customer identification, reporting and record-keeping duties.

  10. Tax Authority issues Circular 05/2018

    Crypto was classed as an asset rather than a currency, so disposals are taxed as capital gains.

  11. Regulated Financial Services Law published

    The law defined virtual currency as a financial asset and required a CMA licence to exchange, manage or safeguard it.

Cite this page: Four Pillars Asia Digital Asset Policy Center, “Israel crypto regulation”, reviewed 5 Oct 2026, https://policy.4pillars.io/israel. Free to reuse with attribution; also as markdown and JSON.

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