Is crypto legal in Israel? Regulation & rules (2026)

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.

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.

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.

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.

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.

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.

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).

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.

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.

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.