Israel regulates crypto through adapted financial services law rather than a dedicated code. Crypto service providers, exchanges, custodians, brokers, need a license from the Capital Market, Insurance and Savings Authority under the 2016 financial services supervision law, a requirement enforced with growing seriousness after years of transitional grace, while the Israel Securities Authority claims jurisdiction over tokens with security characteristics and has advanced proposals to bring digital asset trading platforms under securities law. Banks, historically the chokepoint, operate under Bank of Israel guidance requiring risk-based rather than blanket refusal of crypto-sourced funds.
Tax treatment is settled: crypto is an asset, gains face capital gains tax at 25% for individuals, and the tax authority runs voluntary disclosure tracks aimed at unreported crypto wealth. The Bank of Israel continues digital shekel design work, and wartime finance concerns since 2023 have added seizure of terror-linked wallets to the enforcement picture.
The instruments
Financial services licensing for crypto providers
Providing services in financial assets, defined to include virtual currencies, requires a CMISA license covering exchanges, brokers, and custodians, with fitness, capital, and AML obligations under the Prohibition on Money Laundering Order for financial asset service providers.
Crypto taxation and reporting
Crypto is an asset, not currency: 25% capital gains for individuals, business income rates for traders and miners, with disclosure tracks for unreported holdings and rules easing banks' acceptance of tax payments from crypto proceeds.