Crypto & Digital Assets · Israel
Is crypto legal in Israel? Rules & regulation (2026)
Israel shaded by its crypto & digital assets status
Crypto is developing in Israel, primarily under Multi-agency regime — no single dedicated digital-assets statute. Key regulators: Capital Market, Insurance and Savings Authority (CMISA) under the Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016; Israel Securities Authority (ISA) under the Securities Law, 5728-1968 (with proposed 2023–2026 amendments to bring 'digital assets' expressly in scope); Bank of Israel (stablecoins and digital shekel); Israel Tax Authority (Circular 5/2018 + draft 2024 Income Tax Ordinance amendment); AML/CFT supervision via the Prohibition on Money Laundering Order for financial-service providers..
Crypto is legal in Israel and is regulated through a patchwork of sectoral rules rather than a comprehensive digital-assets law. Exchanges/custodians/wallet providers need a CMISA 'financial asset service' licence, token offerings that qualify as securities fall under the ISA (Howey-style test), tax is treated as capital gains under existing income-tax rules, and stablecoins are moving toward a formal Bank of Israel licensing regime ahead of the planned digital shekel. Several important pieces — the ISA's proposed Securities Law amendment defining 'digital assets', the November 2024 draft tax amendment, and the stablecoin/CBDC framework — remain pending in 2026.
Key points
Under the 2016 Supervision of Financial Services Law, providing services in a 'financial asset' — expressly including virtual currencies — requires a CMISA licence covering exchange, brokerage, custody and wallet activity. Only a handful of firms (Bits of Gold, Bit2C, Hybrid Bridge Holdings, Altshuler Shaham's Horizon) hold permanent licences.
The ISA has proposed amendments to the Securities Law, Joint Investment Trust Law and Investment Advice Law that would define 'digital assets' and bring many tokens under its jurisdiction. A January 2026 ISA amendment aligning digital-investment-advice rules with modern platforms closed for public comment on 4 February 2026; the broader digital-assets bill remains unenacted.
In May 2026 CMISA granted full regulatory approval to BILS — a shekel-pegged stablecoin issued by Bits of Gold and operating on Solana — after a two-year sandbox pilot. Fireblocks provides custody. Separately, the Bank of Israel is preparing a stricter stablecoin licensing regime with 1:1 reserve backing and liquidity/reporting rules.
ITA Circular 5/2018 treats cryptoassets as 'assets' (not currency). Individual disposals are subject to 25% capital gains tax (30% for ≥10% holders), 23% for corporations, or ordinary business-income rates for trading activity. A November 2024 draft Income Tax Ordinance amendment would formally define 'digital assets' and codify these rules but is still in the legislative pipeline as of mid-2026.
The ISA's committee reports on ICOs (2018 interim; 2019 final) adopt the US Howey test to determine whether a token is a security subject to the Securities Law. Security tokens fall under ISA public-offering/prospectus rules; utility and payment tokens generally fall to CMISA's financial-services licensing regime.
DeFi has no dedicated regime; protocols are treated by analogy under existing securities, financial-services and AML rules. The Bank of Israel's digital-shekel team published a 2026 roadmap and Governor Amir Yaron has publicly labelled private stablecoins 'systemically relevant', signalling more formal oversight ahead.
Timeline - major decisions & events
The central bank released a detailed design document for a retail-and-wholesale CBDC and opened public consultation, the most concrete step yet toward a possible digital shekel; a launch decision is targeted for the end of 2026.
Bank of Israel ↗The BOI ran a public innovation challenge with 14 firms (including PayPal, Fireblocks and Shva) to develop payment use cases for a future CBDC, concluding with a conference in late October 2024.
Bank of Israel ↗The Israel Securities Authority proposed amending securities legislation to define 'digital assets', subject token issuers to disclosure-document requirements and require intermediaries to be licensed, applying Howey-style tests to classify security vs. utility vs. payment tokens.
CoinDesk ↗A Finance Ministry report recommended a new licensing-and-supervision framework for issuers of backed digital assets and stablecoins, and proposed transferring oversight of assets with 'significant monetary effect' to the Bank of Israel.
CoinDesk ↗Six years after the licensing regime was created, the CMA issued its first license to a virtual-currency service provider (Bits of Gold), formally bringing exchanges under supervised, regulated status.
Legal 500 ↗Israel implemented an anti-money-laundering order aligning crypto firms with FATF standards, imposing KYC, recordkeeping and reporting obligations administered with the Money Laundering and Terror Financing Prohibition Authority.
Library of Congress ↗In Bits of Gold v. Bank Leumi, Israel's Supreme Court ruled the bank could not categorically refuse service to a licensed crypto exchange, a landmark win that secured banking access for the industry (subject to case-by-case scrutiny).
CoinDesk ↗In the Copel case the Central District Court held that Bitcoin is not a 'currency' and gains are taxable as capital gains, judicially endorsing the Tax Authority's position and rejecting a foreign-currency exemption claim.
Cointelegraph ↗The Israel Tax Authority finalized its position that virtual currencies are 'assets' (not currency), so individual sales are subject to ~25% capital gains tax and business activity to ordinary rates, still the core of Israel's crypto tax treatment.
Israel Tax Authority (gov.il) ↗The Bank of Israel, CMA, Tax Authority, Securities Authority and anti-money-laundering authority jointly warned the public about fraud, volatility and money-laundering risks and stressed crypto is not legal tender, the first official stance, leaving crypto legal but unregulated.
The Times of Israel ↗Israel - other topics
Crypto & Digital Assets in other countries
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