Israel
Overview
Israel regulates crypto through existing financial law rather than a dedicated statute, with the Supervision of Financial Services (Regulated Financial Services) Law serving as the anchor framework; exchanges and custody providers must obtain a "service provided in a financial asset" license from the Capital Market Authority (CMA), while security tokens, ICOs, and trading platforms fall under ISA jurisdiction via proposed Securities Law amendments applying Howey-like token classification tests. The CMA and ISA share primary oversight, with the Israel Money Laundering and Terror Financing Prohibition Authority (IMPA) enforcing the Prohibition on Money Laundering Law, which mandates AML/KYC, customer due diligence, transaction monitoring, and suspicious activity reporting across all crypto businesses. The most decision-relevant structural feature is Israel's "closed garden" model, which requires all crypto transactions to route exclusively through CMA-licensed entities — a hard operational constraint for any firm seeking market access. (gov.il)
Regulatory Bodies
VASP: Financial Asset Service Provider (FASP) License from ISA/CMISA.
National Crypto Strategy Committee interim report proposes a unified regulator, token issuance rules, and banking integration; parliamentary review and 2026 legislative steps expected.
Operating Models
9/9 verdictsCan specific business models operate in Israel? Each card answers the operational question for one kind of operator. Curated cells reflect counsel-grade review; AI-generated cells should be confirmed before relying on them.
Conditional · high burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedPermitted, no licensing.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedConditional · high burden.
AI · UnreviewedPrimary Legislation
| Law / Regulation | Year | Scope |
|---|---|---|
| Financial Asset Service Providers Regulation Law (2023) | 2023 | Financial Asset Service Providers Regulation Law (2023) — FASP licensing covering crypto exchange, custody, portfolio management. |
| ISA proposed amendments to the Israeli Securities Law to categorize tokens (e.g. | ISA proposed amendments to the Israeli Securities Law to categorize tokens (e.g., security vs. utility, using Howey-like tests) and regulate offerings, potentially impacting custody. | |
| ISA committee evaluating decentralized offerings; ongoing stablecoin regulation | ISA committee evaluating decentralized offerings; ongoing stablecoin regulation likely under BOI. | |
| Supervision of Financial Services (Regulated Financial Services) Law: Core licen | Supervision of Financial Services (Regulated Financial Services) Law: Core licensing framework (no direct URL in results; see CMA site via ). | |
| No dedicated stablecoin law; ongoing efforts via National Crypto Strategy Commit | 2025 | No dedicated stablecoin law; ongoing efforts via National Crypto Strategy Committee (interim report 2025, potential 2026 legislation) and 2024 Financial Services Law amendments enabling crypto oversight by BOI, ISA, and others. |
| ISA proposed Securities Law amendments for token classification (pending). | ISA proposed Securities Law amendments for token classification (pending). | |
| No comprehensive crypto-specific law yet; reforms sought via National Crypto Str | No comprehensive crypto-specific law yet; reforms sought via National Crypto Strategy Committee's July interim report, advocating unified authority and stablecoin/tokenization rules. | |
| Proposed ISA amendments to Securities Law: To regulate digital assets by categor | Proposed ISA amendments to Securities Law: To regulate digital assets by category (e.g., security vs. utility tokens).5 | |
| No full dedicated crypto law as of 2025-2026 sources; regulation evolves via exi | 2025 | No full dedicated crypto law as of 2025-2026 sources; regulation evolves via existing laws and guidance.2 5 |
Licensing Requirements
CMISA — Financial Asset Service Provider licensing
Israel Money Laundering Prohibition Authority — AML/CFT compliance
Supervision of Financial Services (Regulated Financial Services) Law: Core licensing framework (no direct URL in results; see CMA site via ).
Exchanges: Require a license as a "service provided in a financial asset" under the Supervision of Financial Services Law from the CMA. Recent ISA amendments (August 2024) allow non-bank Tel Aviv Stock Exchange (TASE) members (e.g., brokerages) to offer trading in approved cryptocurrencies like Bitcoin and Ethereum via licensed exchanges.
Custody Providers: Need the same CMA financial asset service license for management or custody of virtual currencies; Israeli Trust Act provisions may also apply. Transactions must route through licensed entities in the "closed garden" model.
Payment Processors: Not explicitly detailed for crypto; BOI may regulate stablecoins/payment tokens if they become significant means of payment, focusing on financial stability. General VASP activities fall under CMA/Financial Services Law.
Prepare documents: company registration, business plan, proof of capital, directors' details, compliance handbook, IT/security policies, risk models.
Submit to CMA (or relevant authority for VASPs/exchanges/custody).
Undergo verification/review (8-14 weeks, depending on completeness).
Receive decision; ongoing obligations include real-time monitoring and regulator engagement.
ISA amendment (Aug 2024): https://practiceguides.chambers.com/practice-guides/blockchain-2025/israel/trends-and-developments
BOI stablecoin papers: Referenced in
BOI Principles for Stablecoin Activity (2023): Core document recommending legislation; Hebrew PDF at https://boi.org.il/media/aoxh4ezf/%D7%9E%D7%A1%D7%9E%D7%A9-%D7%A2%D7%A7%D7%A8%D7%95%D7%A0%D7%95%D7%AA-%D7%9C%D7%A4%D7%A2%D7%99%D7%9C%D7%95%D7%AA-%D7%9E%D7%98%D7%91%D7%A2%D7%95%D7%AA-%D7%99%D7%A6%D7%99%D7%91%D7%99%D7%9D-%D7%9E%D7%AA%D7%95%D7%A8%D7%92%D7%9D-%D7%9C%D7%90%D7%A0%D7%92%D7%9C%D7%99%D7%AA-002.pdf.
No dedicated stablecoin law; ongoing efforts via National Crypto Strategy Committee (interim report 2025, potential 2026 legislation) and 2024 Financial Services Law amendments enabling crypto oversight by BOI, ISA, and others.
ISA proposed Securities Law amendments for token classification (pending).
For individuals: Israeli citizenship or residency, legal majority, no bankruptcy declaration, and no convictions for offenses unfit for financial handling.
For corporations: No requirement to dissolve and minimum specified equity.
Israeli Trust Act: Potentially applicable to custodians. https://barlaw.co.il/crypto-custody-services-and-regulation-a-review/
AML/KYC Requirements
No verified facts yet. 2 unverified fact(s) in explorer
Travel Rule
No verified facts yet. 7 unverified fact(s) in explorer
Tax Reporting
Gains from selling, exchanging, or disposing of cryptocurrencies are taxed at 25% for individual investors, calculated as the difference between acquisition cost and sale proceeds (using fair market value at receipt for mining).
Losses are recognized as capital losses, offsettable against gains, with records required on tax returns.
This treatment stems from ITA circulars since 2014, viewing crypto as an "asset" under the Income Tax Ordinance (New Version), 1961.
For individuals holding as investments: Capital gains tax at 25%.
For business activities (frequent trading, mining): Taxed as ordinary income at marginal rates up to 53%, with mining income includible at fair market value on receipt date.
Payments in crypto for wages or services follow standard property payment rules, subject to withholding and reporting.
Individual investors: No VAT on gains or trades.
Miners or traders: Classified as "dealers," liable for 17% VAT on transactions; business traders as "financial institutions" face additional 17% profit tax and cannot reclaim input VAT.
Applies under the Value Added Tax Law, 5736-1975.
Individuals: Report gains/losses on annual tax returns with transaction records (dates, amounts, fair market values) for audit verification; failure to report is a criminal offense. [9 from 2]
Businesses: Full documentation of trades, VAT accounting, and income reporting; crypto used in payments requires standard withholding.
Pre-2014 non-compliance may qualify for penalty relief with reasonable cause.
ITA classifies virtual currencies as "means of virtual payment" and assets for tax (Income Tax Ordinance 1961; VAT Law 1975); 2018 confirmation of capital nature.
January 2021: Israel Securities Authority (ISA) views certain cryptotokens as securities (not extending to traded cryptocurrencies with blockchains).
Official ITA FAQ on digital assets covers definitions, taxation triggers, and rates: https://www.gov.il/en/pages/faq-digital-assets
Custody Requirements
Custody regulation data collection in progress.
Stablecoin Regulation
Stablecoin regulation data collection in progress.
Securities Classification
Securities classification data collection in progress.
Sanctions & Restrictions
Sanctions data collection in progress.
Research & Articles
Regulatory Forecast
high confidenceLikely regulatory action expected around 2026-05-18
Based on 53 historical regulatory events for Israel, averaging every 18 days, with increasing regulatory activity.
Recent Updates
For Financial Asset Service Provider (FASP) licensing, CMISA often collaborates with regulatory bodies like the ...
For Financial Asset Service Provider (FASP) licensing, CMISA often collaborates with regulatory bodies like the People’s Bank of China (PBOC) or China Banking and Insurance Regulatory Commission (CBIRC).
Bank of Israel (BOI): Issued warnings on risks like fraud and money laundering (2014 statement); does not recogni...
Bank of Israel (BOI): Issued warnings on risks like fraud and money laundering (2014 statement); does not recognize crypto as legal tender (2018); handles temporary tax payment procedures for crypto profits when banks refuse funds due to AML concerns.
National Crypto Strategy Committee: Delivered an interim report in July (year unspecified, likely 2025) to the Kn...
National Crypto Strategy Committee: Delivered an interim report in July (year unspecified, likely 2025) to the Knesset, proposing five pillars: centralized regulator, token issuance guidelines, banking integration, and more.
Supervision of Financial Services (Regulated Financial Services) Law 5776-2016: Defines "financial assets" to inc...
Supervision of Financial Services (Regulated Financial Services) Law 5776-2016: Defines "financial assets" to include virtual currency; mandates licenses from the Supervisor of Financial Services for related activities (e.g., for Israeli citizens/residents of legal age, not bankrupt).
Temporary Procedure (date unspecified): Allows tax payments on crypto profits from foreign accounts to BOI when Israe...
Temporary Procedure (date unspecified): Allows tax payments on crypto profits from foreign accounts to BOI when Israeli banks refuse due to tracking/ML risks.
Being an Israeli citizen/resident of legal age, legally competent, and not bankrupt (for individuals); or solvent for...
Being an Israeli citizen/resident of legal age, legally competent, and not bankrupt (for individuals); or solvent for corporations.
ISA proposed amendments to the Israeli Securities Law to categorize tokens (e.g., security vs. utility, using How...
ISA proposed amendments to the Israeli Securities Law to categorize tokens (e.g., security vs. utility, using Howey-like tests) and regulate offerings, potentially impacting custody.
National Crypto Strategy Committee interim report proposes a unified regulator, token issuance rules, and banking...
National Crypto Strategy Committee interim report proposes a unified regulator, token issuance rules, and banking integration; parliamentary review and 2026 legislative steps expected.
Regulatory guidance sought on stablecoins and tokenized assets, covering custody, settlement, and protections; Ba...
Regulatory guidance sought on stablecoins and tokenized assets, covering custody, settlement, and protections; Bank of Israel (BOI) principles for stablecoin risk management.
Exchanges: Require a license as a "service provided in a financial asset" under the Supervision of Financial ...
Exchanges: Require a license as a "service provided in a financial asset" under the Supervision of Financial Services Law from the CMA. Recent ISA amendments (August 2024) allow non-bank Tel Aviv Stock Exchange (TASE) members (e.g., brokerages) to offer trading in approved cryptocurrencies like Bitcoin and Ethereum via licensed exchanges.
ISA amendment (Aug 2024): https://practiceguides.chambers.com/practice-guides/blockchain-2025/israel/trends-and-devel...
ISA amendment (Aug 2024): https://practiceguides.chambers.com/practice-guides/blockchain-2025/israel/trends-and-developments
Crypto Travel Rule Alignment: Under FATF standards adopted in Israel, VASPs comply with Travel Rule-like requirem...
Crypto Travel Rule Alignment: Under FATF standards adopted in Israel, VASPs comply with Travel Rule-like requirements for transfers, including counterparty sanctions verification; EU's Regulation (EU) 2023/1113 (MiCA-related) influences via cross-border operations, applying to all qualifying crypto transfers without thresholds since December 2024.
No dedicated stablecoin law; ongoing efforts via National Crypto Strategy Committee (interim report 2025, potential 2...
No dedicated stablecoin law; ongoing efforts via National Crypto Strategy Committee (interim report 2025, potential 2026 legislation) and 2024 Financial Services Law amendments enabling crypto oversight by BOI, ISA, and others.
ISA proposed Securities Law amendments for token classification (pending).
ISA proposed Securities Law amendments for token classification (pending).
Pre-2014 non-compliance may qualify for penalty relief with reasonable cause.
Pre-2014 non-compliance may qualify for penalty relief with reasonable cause.
The exact effective date of implementation in Israel
The exact effective date of implementation in Israel
For individuals: Israeli citizenship or residency, legal majority, no bankruptcy declaration, and no convictions for ...
For individuals: Israeli citizenship or residency, legal majority, no bankruptcy declaration, and no convictions for offenses unfit for financial handling.
Bank of Israel (BOI): Warned against risks like fraud and money laundering (2014 statement); involved in stableco...
Bank of Israel (BOI): Warned against risks like fraud and money laundering (2014 statement); involved in stablecoin frameworks and does not recognize virtual currencies as legal tender.1 3 4
Proposed ISA amendments to Securities Law: To regulate digital assets by category (e.g., security vs. utility tokens).5
Proposed ISA amendments to Securities Law: To regulate digital assets by category (e.g., security vs. utility tokens).5
August 2024: ISA amendment allows non-bank Tel Aviv Stock Exchange members (brokerages) to offer Bitcoin/Ethereum tra...
August 2024: ISA amendment allows non-bank Tel Aviv Stock Exchange members (brokerages) to offer Bitcoin/Ethereum trading/custody in a "closed garden" model via regulated accounts.5
Penalty Amount: Seizure of crypto assets. Israel has reported seizing tens of millions of dollars' worth of crypt...
Penalty Amount: Seizure of crypto assets. Israel has reported seizing tens of millions of dollars' worth of cryptocurrency from these groups over the past few years. For example, in June 2021, over NIS 2 million (approx. $600,000) was seized, and significantly larger seizures have occurred since, especially after October 7, 2023. These are ongoing actions, with assets being forfeited to the state.
ISA amendment (Aug 2024): Allows non-bank TASE members to offer trading in approved cryptocurrencies. Chambers Pr...
ISA amendment (Aug 2024): Allows non-bank TASE members to offer trading in approved cryptocurrencies. Chambers Practice Guide - Israel Blockchain Trends
BOI Principles for Stablecoin Activity (2023): Core document recommending legislation; Hebrew PDF available. Bank...
BOI Principles for Stablecoin Activity (2023): Core document recommending legislation; Hebrew PDF available. Bank of Israel - Stablecoin Principles
No dedicated stablecoin law as of April 2026. Ongoing efforts via National Crypto Strategy Committee (interim rep...
No dedicated stablecoin law as of April 2026. Ongoing efforts via National Crypto Strategy Committee (interim report 2025, potential 2026 legislation) and 2024 Financial Services Law amendments enabling crypto oversight by BOI, ISA, and others. Barnea Law - Crypto Regulation Review and Bank of Israel - Stablecoin Principles
The "CMISA" reference in fact intel.for-financial-asset-service-provider-fasp-licensing-cmisa appears to erroneousl...
The "CMISA" reference in fact intel.for-financial-asset-service-provider-fasp-licensing-cmisa appears to erroneously reference China (People's Bank of China, CBIRC) rather than Israel. Israel's CMISA (Capital Market, Insurance and Savings Authority) is a domestic Israeli regulator under the Ministry of Finance, not related to Chinese regulatory bodies. The collaborative relationships referenced (with PBOC, CBIRC) likely pertain to China's regulatory framework, not Israel's.
Bank of Israel - Stablecoin Principles
Bank of Israel - Stablecoin Principles
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