Israeli Regulator Sets New Rules on Which Cryptocurrencies Can Be Sold Locally

The Israeli Capital Market Authority published a draft directive defining for the first time which virtual currencies Israeli crypto companies may offer to their customers. While the public mainly recognizes well-known cryptocurrencies like Bitcoin and Ethereum, over 13,000 virtual currencies trade globally, including smaller coins such as meme coins like Dogecoin and other digital assets with unclear liquidity or legitimacy.

Until now, Israeli companies decided independently which cryptocurrencies to offer, but the new directive introduces uniform regulatory limits. It requires that any virtual currency offered in Israel must have a market capitalization of at least $500 million and be among the top 50 digital assets worldwide for six consecutive months. Additionally, the currency must be recognized internationally, registered for trading with at least five regulated entities in the European Union or New York.

To reduce risks of fraud and market manipulation, the regulator mandates decentralization tests, prohibiting any single entity from holding more than 15% of the currency's circulation or the top ten holders collectively owning over half. Fully anonymous assets and NFTs are excluded from the permitted list. Conversely, the directive creates a streamlined process for stablecoins pegged to fiat currencies like the dollar or shekel, which are exempt from market cap and international ranking requirements to encourage regulated local issuance.

The new rules also impose operational responsibilities on companies: their boards must annually approve listing policies, risk and cybersecurity managers must review any new coin addition, and the regulator must be notified 60 days before launch. The authority reserves the right to reject assets posing unreasonable risks. Quarterly monitoring will ensure compliance, with non-qualifying coins removed from purchase options within three days and holders given 30 days to sell or transfer.

This regulatory move aims to balance reducing public risk with some commercial flexibility loss, effectively limiting available assets to leading, liquid, and internationally recognized cryptocurrencies while excluding younger or speculative coins from the regulated Israeli market.