Israel Curated

DeFi Intel Research Desk2026-07-14Asia

Is crypto legal in Israel? (2026)

Yes — cryptocurrency is legal in Israel. Current status: Legal — licensed under 2016 Financial Services Law. Oversight sits with Israel Securities Authority (ISA) / Capital Market, Insurance and Savings Authority (CMISA). Full details — governing law, licensing, tax and dated enforcement history — follow below (last reviewed 2026-07-14).

Framework: Supervision of Financial Services (Regulated Financial Services) Law 5776-2016 (CMISA licensing) + AML Order for crypto service providers (in force 14 November 2021) + ISA oversight of security tokens and, since 2024–25, of crypto trading in the traditional capital market.

Israel regulates crypto through a division of labour rather than a single crypto act. CMISA licenses "financial asset service providers" — exchanges, brokers, custodians and wallet providers — under the 2016 Financial Services Law; Hybrid Bridge Holdings received Israel's first crypto licence in early September 2022, and Bits of Gold became the first active broker/exchange to receive the capital-markets licence later that month. The ISA determines when a token is a security and regulates it accordingly, and has proposed bringing digital assets used for financial investment under the securities, joint-investment and advice/portfolio-management laws. AML/CFT obligations for crypto service providers — KYC, recipient identification and verification, risk-based monitoring and reporting — took effect on 14 November 2021 under an order developed by CMISA and the Ministry of Justice, while banks answer separately to the Bank of Israel's Banking Supervision Department.

The 2024–2026 trajectory is steady mainstreaming. In August 2024 the ISA approved an amendment letting non-bank Tel Aviv Stock Exchange members offer customers crypto trading and custody in a "closed garden" — initially limited to Bitcoin and Ether, ring-fenced from other activity, with dedicated risk-disclosure sign-off. A Non-Bank Broker-Dealer Bill submitted to the Knesset in July 2025 would move oversight of non-bank brokers to the ISA and align licensing with MiFID II principles. In January 2026 the ISA proposed amending its licensee directive on technology-based service provision to cover algorithmic and digital-platform investment services. On the monetary side, the Bank of Israel published the preliminary design of the digital shekel on 3 March 2025 — a multipurpose CBDC for retail and wholesale users with a privacy-by-design architecture, with the issuance decision deferred beyond 2026 — and authorities have signalled tighter licensing, reserve and oversight rules for private stablecoin issuers. The landmark came on 28 April 2026, when CMISA granted full approval to BILS — a shekel-pegged stablecoin issued by Bits of Gold on Solana, developed with Fireblocks with EY audit oversight — after a two-year sandbox pilot begun March 2024, with reserves required to sit in segregated accounts at Israeli banks.

Tax treatment

The Israel Tax Authority treats crypto as an asset, not a currency. Individual investors pay capital gains tax on the real (inflation-adjusted) gain; activity rising to a business is taxed at marginal income-tax rates instead. Every disposal is a taxable event — including crypto-to-crypto swaps, which count as barter transactions even when no fiat is touched.

• Capital-gains rate (general): 25% on real gains for individuals
• Business/trading income: marginal income-tax rates for individuals classified as traders
• Holding-period rule: no reduction
• Voluntary disclosure: a temporary procedure published 25 August 2025 (valid to 31 August 2026) expressly covers digital assets for the first time — no anonymous track, criminal immunity in exchange for full reporting, and a simplified "green track" for crypto income up to NIS 500,000 and holdings up to NIS 1.5 million (as of 31 December 2024). Uptake has been thin: only 58 crypto disclosure requests covering roughly NIS 145.8 million (~US$50.7M) in the first months.

Travel rule applicability

Status: AML regime in force. Crypto service providers have been subject to Israel's AML/CFT order since 14 November 2021, covering identification and verification of transfer recipients, record-keeping and reporting under CMISA supervision, in line with FATF standards. Israel-specific transfer-data thresholds for the Travel Rule are pending verification by DeFi Intel.

Notable enforcement actions

• July 2021. Israel's National Bureau for Counter Terror Financing (NBCTF) seizes cryptocurrency wallets tied to Hamas donation campaigns — an early landmark in state crypto seizures.
• June 2023. NBCTF seizes about US$1.7 million in crypto from wallets financing Hezbollah and Iran's Quds Force — the first seizure from those organisations — mostly Tron-based USDT, with Binance and Chainalysis cooperating.
• October 2023. After the 7 October attacks, Israeli authorities freeze more than 100 Hamas-linked accounts on Binance and request data on roughly 200 more.
• March 2026. NBCTF issues Administrative Seizure Order ASO-6/26 against crypto wallets determined to be property of, or used by, Hamas.

Note: an earlier version of this profile reported a 2024 AML fine against Bits of Gold; DeFi Intel could not verify that action against any primary or secondary source and has removed it.

Public licensed CASP list

CMISA licenses crypto firms as financial asset service providers. Firms reported holding the licence include:

• Bits of Gold — first licensed crypto broker/exchange (September 2022); broker, custodian and issuer of the BILS shekel stablecoin (approved 28 April 2026)
• Hybrid Bridge Holdings Ltd — holder of Israel's first crypto licence (early September 2022); licensed crypto-oriented company
• Altshuler Shaham Horizon — crypto custody and trading arm of the Altshuler Shaham investment house; among the few firms approved to work with banks
• Bit2C — long-running Israeli exchange, reported licensed

This list reflects licences reported in legal commentary rather than a direct registry mirror; CMISA's full register of financial asset service providers is pending a DeFi Intel mirror. Since August 2024, non-bank TASE members can also offer Bitcoin and Ether trading under the ISA's closed-garden framework without a separate CMISA crypto licence.

Comparison to neighbours

Compare Israel crypto regulation with three geographically adjacent jurisdictions:

Doing business in Israel — practical notes

Providing exchange, brokerage, custody or wallet services to Israeli residents requires a CMISA financial asset service provider licence under the 2016 law, plus compliance with the 2021 AML order; token offerings that constitute securities fall to the ISA. Banking access — historically the sector's chief friction point — is widening through regulated channels: the August 2024 closed-garden framework lets non-bank TASE brokerage members offer Bitcoin and Ether to retail clients, and licensed firms such as Altshuler Shaham Horizon are approved to interface with banks. The 2025 voluntary-disclosure window (open to 31 August 2026) is the sanctioned path for residents regularising previously unreported crypto gains, with banks more able to accept disclosed proceeds. Stablecoin issuance is now a licensable reality — BILS's April 2026 approval sets the template: sandbox pilot, 1:1 shekel backing, reserves in segregated Israeli bank accounts, external audit — but broader stablecoin legislation and the digital shekel remain in progress, so issuers should expect tightening reserve and licensing rules. Counter-terror-financing enforcement is aggressive and wallet-level: NBCTF seizure orders reach funds on offshore exchanges, and platforms serving the region are expected to cooperate.

Methodology and sources

This profile was researched and updated by DeFi Intel's research desk on 2026-07-14 from the primary and secondary sources listed below. Claims that could not be verified against a source are omitted or marked pending — we do not republish unverified third-party datasets. Submit corrections and primary-source links to research@defi-intel.com.

Sources

• CoinDesk — Israel's markets regulator grants first crypto licence to Hybrid Bridge Holdings (early Sept 2022)
• CoinDesk — Bits of Gold, first active broker/exchange to receive CMISA capital-markets licence (Sept 2022)
• CoinDesk — Israel's AML order for crypto service providers in force 14 Nov 2021
• Global Legal Insights — Blockchain & Cryptocurrency Laws: Israel (Aug 2024 TASE closed-garden approval; ISA digital-asset proposals)
• Lexology — 2025 year-end review: Israeli financial regulation and digital currencies (broker-dealer bill, July 2025)
• CoinDesk — CMISA approves BILS, first regulated shekel stablecoin (28 April 2026)
• Gornitzky — Voluntary disclosure 2025: crypto included, anonymity gone (25 Aug 2025 procedure)
• Israel Tax Authority — Digital assets FAQ (crypto taxed as an asset)
• Chainalysis — NBCTF seizes $1.7M in crypto from Hezbollah and Quds Force (June 2023)
• Chainalysis — Israel seizes Hamas-linked crypto addresses (July 2021)
• Nominis — NBCTF Administrative Seizure Order ASO-6/26 against Hamas wallets (March 2026)
• Lexology — Cryptoasset trading in Israel (CMISA licensees: Hybrid Bridge, Bits of Gold, Altshuler Shaham Horizon, Bit2C)
• Bank of Israel — Preliminary design for the digital shekel system published for feedback (3 March 2025)