Israel -- Stablecoin Regulations Regulatory Overview

Israel lacks a fully approved regulatory framework for stablecoins as of the latest available information, with regulation still in development. The Bank of Israel (BOI) published principles for stablecoin activities in early 2023, recommending legislation for full reserves, licensing, and oversight, but no specific laws have been enacted yet[1][2][4].

Classification

Stablecoins are not explicitly classified as e-money, payment tokens, or securities under current law. The BOI views them as potential means of payment, especially if they become systemic, and may regulate them to ensure financial stability; the Israel Securities Authority (ISA) could oversee them if they qualify as securities via tests similar to the US Howey Test[1][2][4].

Reserve Requirements

BOI principles require 100% reserves backing stablecoins, mirroring global standards like those in the EU[2][4].

Issuer Licensing

Issuers must obtain licensing from relevant regulators (primarily BOI for payment aspects); BOI approval is needed for systemic stablecoins, with potential MOUs to avoid overlapping supervision[2].

Redemption Rights

BOI principles mandate clear redemption rights at face value, aligned with international recommendations[2][4].

Algorithmic Stablecoin Rules

No specific rules for algorithmic stablecoins are outlined in available sources; general principles apply to all stablecoins[2].

CBDC Interaction

No direct rules on CBDC interaction with stablecoins; BOI leads on digital currencies but focuses stablecoin principles on privately issued assets[1][2].

Key Legislation and References

• 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[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[3][4][5].
• ISA proposed Securities Law amendments for token classification (pending)[4].

Supervision may involve BOI for payments, ISA for securities, and Capital Market Authority for services; no shekel-pegged stablecoins circulate[1][2]. Recent pushes (e.g., 2025 forum lobbying) aim for clarity by 2026[3][5].