# Israel crypto regulation From the Four Pillars Asia Digital Asset Policy Center. Cite as: Four Pillars Asia Digital Asset Policy Center, "Israel crypto regulation", reviewed 2026-10-05, https://policy.4pillars.io/israel. Free to reuse with attribution: cite "Four Pillars Asia Digital Asset Policy Center" and link to the page the fact comes from (each market has its own URL), and to the primary source where one is given. Terms: https://policy.4pillars.io/developers#attribution Page: https://policy.4pillars.io/israel Region: Middle East. Last reviewed: 2026-10-05. > 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. 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%. 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. ### Snapshot - Exchange licensing: Partial. CMA licenses exchange and custody under the 2016 law; 9 licensees by June 2026, new custody rules in 2027 - Stablecoin regime: Developing. Draft stablecoin law published June 2026; BILS shekel token approved under an existing licence in April - Tokenisation & RWA: Developing. Security tokens fall under securities law and the ISA; no dedicated tokenisation or RWA regime yet - Retail access: Comprehensive. Retail can buy via CMA-licensed providers and six Bitcoin mutual funds listed since December 2024 - Tax clarity: Comprehensive. Tax Authority Circular 05/2018 treats crypto as an asset; individual gains taxed at a 25% base rate ### Quick answers **Is crypto legal in Israel?** Yes. Individuals can buy and sell crypto onshore through licensed providers. Retail can buy via CMA-licensed providers and six Bitcoin mutual funds listed since December 2024. Four Pillars rates retail access in Israel as comprehensive (reviewed 5 Oct 2026). **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. ### Key numbers - 9 CMA-licensed financial asset (crypto) service providers (as of 2026-06-29) - 25% Base capital gains tax rate on crypto for individuals (as of 2026-10-05) - NIS 2.5m Minimum equity for a licensed crypto custodian under 2026 CMA rules (as of 2026-07) - 6 Bitcoin mutual funds launched in Israel on 31 December 2024 (as of 2024-12-31) ### 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. ### Regulators - **CMA**, Capital Market, Insurance and Savings Authority: Licenses and supervises financial asset service providers (crypto exchange, management and custody) and would license stablecoin issuers. 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. 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. - **ISA**, Israel Securities Authority: Regulates security tokens, public offerings, crypto mutual funds and ETFs, and licensed portfolio managers and advisers. 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. 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. - **BOI**, Bank of Israel: Supervises banks' handling of crypto-sourced funds, sets stablecoin policy input and runs the digital shekel project. Israel's central bank: it runs monetary policy, issues the shekel, oversees payment systems and supervises the banks. 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. - **ITA**, Israel Tax Authority: Sets the tax treatment of digital assets, including capital gains on disposals and reporting of crypto activity. Israel's tax authority, part of the Finance Ministry: it administers income tax, capital gains tax, VAT and customs. 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. - **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. 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. 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. ### Licences #### Financial asset service licence - Regulator: CMA - Legal basis: Supervision of Financial Services (Regulated Financial Services) Law, 2016; CMA circulars - Covers: Exchanging one financial asset (including virtual currency) for another or for money, and managing or safeguarding financial assets for clients in Israel. - Requirements: Fit and proper controllers and officers, with the CMA vetting ownership and means of control; Minimum equity of NIS 2 million, or NIS 2.5 million with custody, plus 0.25% of client assets held (2026 rules); From January 2027, client assets held in trust in segregated accounts, with multi-party approval of transfers and a register updated at least daily (Circular 2026-10-2); A custody officer, a board-approved custody policy and quarterly checks by an independent accountant of segregation and reconciliation; Customer identification, reporting and record-keeping under the 2021 AML order - Holders: 9 (as of 2026-06-29) - Notable holders: Bits of Gold, Hybrid Bridge Holdings, Tectona, Coinbox - Official register: - Page: https://policy.4pillars.io/israel/licences#lic-1 #### Stable digital currency issuer licence (proposed) - Regulator: CMA - Legal basis: Draft Supervision of Financial Services (Issuance of Stable Digital Currencies) Law, 2026 - Covers: Issuing and redeeming fiat-referenced stablecoins in Israel; the bill was published for comment in June 2026 and is not yet law. - Requirements: Licence required to issue stable digital currencies; Controls on who may hold means of control in an issuer; Fitness requirements for directors and key office holders; Restrictions and duties on issuer activity modelled on the US GENIUS Act and EU MiCA - Page: https://policy.4pillars.io/israel/licences#lic-2 ### Timeline - 2016-08-01: 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. - 2018-01-17: Tax Authority issues Circular 05/2018. Crypto was classed as an asset rather than a currency, so disposals are taxed as capital gains. - 2021-11-14: AML order for financial asset service providers takes effect. Crypto service providers became subject to customer identification, reporting and record-keeping duties. - 2022-09: 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. - 2022-11-28: Finance Ministry publishes digital asset regulation report. The Chief Economist's report recommended licensing stablecoin issuers and clarifying crypto tax rules. - 2024-12-31: 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. - 2025-03-03: 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. - 2026-04: 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. - 2026-06-29: Draft stablecoin law published for comment. The bill would give the CMA licensing and supervisory powers over issuers of stable digital currencies. - 2026-07-14: 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. - 2026-07-19: 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. ### Primary sources - [Financial Asset Custody Provisions, Circular 2026-10-2](https://www.gov.il/BlobFolder/dynamiccollectorresultitem/regulation-legislation305/he/Custody%20Circular%20Final-pdf.pdf). Capital Market, Insurance and Savings Authority (CMA), 2026-07-19, enacted. Binding custody rules for financial asset service licensees: client assets in trust in segregated accounts, a custody officer, a register updated at least daily, multi-party (e.g. multisig) approval of transfers, quarterly checks by an independent accountant and controls on outsourced custodians. Published 19 July 2026, in force six months after publication (January 2027). - [Draft amendment to Directive 411 on payment services related to virtual currency activity](https://www.boi.org.il/roles/supervisionregulation/drafts/draft111606/). Bank of Israel, Banking Supervision Department, 2026-07-14, consultation. Would stop banks refusing all crypto-sourced funds, replace the automatic NIS 100,000 source-of-funds check with a risk-based test and treat licensed providers as a mitigating factor. Comments closed on 4 August 2026; not yet final as of 5 October 2026. - [Finance Ministry and CMA publish for comment the draft law regulating the issuance of stable digital currencies in Israel](https://www.gov.il/he/pages/press_290626). Ministry of Finance / Capital Market, Insurance and Savings Authority, 2026-06-29, consultation. Announces the draft stablecoin law, which would require a licence to issue stable digital currencies and give the CMA licensing and supervisory powers, drawing on the GENIUS Act and MiCA (gov.il blocks automated checks; URL confirmed via search). - [Management of Anti-Money Laundering and Countering Financing of Terrorism Risks (Proper Conduct of Banking Business Directive No. 411)](https://www.boi.org.il/roles/supervisionregulation/nbt/nbt411/). Bank of Israel, Banking Supervision Department, 2026-04-30, in force. The banking AML directive; section 87A, added on 9 May 2022, sets how banks handle payment services linked to customers' virtual currency activity. The current version (No. 29, Hebrew) was issued on 30 April 2026. - [The Digital Shekel Technological Consultations Series](https://www.boi.org.il/media/s3mlmxvv/the-digital-shekel-technological-consultations-series.pdf). Bank of Israel, 2025-05, consultation. Invites vendors, technologists and academics to assess technologies that could deliver the digital shekel design. Responses were due by 30 June 2025; the Bank has not announced an issuance decision. - [Preliminary Design for the Digital Shekel System](https://www.boi.org.il/media/54dpz1ew/initial-design-for-the-digital-shekel-system.pdf). Bank of Israel, 2025-03, guidance. The high-level design of a possible retail digital shekel, which would not be programmable and would allow limited anonymous payments. Public feedback closed on 15 May 2025; no decision to issue has been made. - [Taxation of Digital Currencies (Annual Audit Report 75A, Part 2)](https://library.mevaker.gov.il/sites/DigitalLibrary/Documents/2024/2024.11-75A-PartB/2024.11-75A-PartB-201-Digital-currency.pdf). State Comptroller of Israel, 2024-11, guidance. The State Comptroller's audit of how the Tax Authority taxes and tracks digital currency gains, finding gaps in enforcement and legislation (Hebrew). - [Digital Asset Regulation: Recommendations for the development of domestic regulation](https://www.gov.il/BlobFolder/news/press_28112022/en/PressReleases_eng_Files_eng_Digital-Asset-Regulation.pdf). Ministry of Finance, Office of the Chief Economist, 2022-11-28, guidance. The government's policy blueprint for crypto, recommending licensing of backed stablecoin issuers, Bank of Israel oversight of systemic tokens and clearer tax rules. English version. - [Prohibition on Money Laundering Order for financial asset service providers takes effect](https://www.gov.il/he/pages/aml-msb-order-14112021). Israel Money Laundering and Terror Financing Prohibition Authority (IMPA), 2021-11-14, in force. Announces that the AML order extending identification, reporting and record-keeping duties to financial asset service providers took effect on 14 November 2021 (gov.il blocks automated checks; URL confirmed via search). - [Committee to Examine the Regulation of Decentralised Cryptographic Currency Issuance to the Public: Final Report](https://www.iosco.org/library/ico-statements/Israel%20-%20ISA%20-%2020190301%20-%20Regulation%20of%20Decentralised%20Cryptographic%20Currency%20Issuance%20to%20the%20Public%20Final%20Report.pdf). Israel Securities Authority (ISA), published by IOSCO, 2019-03-01, guidance. Sets out when tokens are securities under Israeli law, bringing investment tokens under the Securities Law while leaving pure payment and utility tokens outside it (IOSCO blocks automated checks; URL confirmed via search). - [Income Tax Circular 05/2018: Taxation of activity in decentralised means of payment ("virtual currencies")](https://www.gov.il/he/pages/income-tax-professional-inst-5-2018). Israel Tax Authority, 2018-01-17, in force. Treats virtual currency as an asset, not a currency, so gains are capital gains (25% base rate for individuals) unless the activity is a business; miners and traders may owe VAT (gov.il blocks automated checks; URL confirmed via search). - [Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016 (Official Gazette, Sefer HaChukim 2570)](https://fs.knesset.gov.il/20/law/20_lsr_348251.pdf). Knesset (Reshumot, Sefer HaChukim), 2016-08-01, in force. The core law: defines virtual currency as a financial asset and makes exchanging, managing or safeguarding it a licensed activity supervised by the CMA. Published in the gazette on 1 August 2016 (Hebrew).