Israeli Regulators Accelerate Crypto Integration with New Clear Guidelines and Stablecoin Legislation

The Israeli Capital Market Authority (CMA) issued a new draft circular yesterday, marking the third regulatory update for the crypto sector within two months. This regulatory blitz also includes recent guidelines from the Bank of Israel, reflecting an unprecedented effort to mainstream cryptocurrency in Israel. Cryptocurrencies, digital assets based on blockchain technology, have long operated in a legal gray area with limited banking support and unclear regulations. The recent measures signal a shift from caution to principle-based regulation aligned with global trends.

The new CMA draft defines which cryptocurrencies Israeli licensed companies can offer for trading, allowing the top 50 digital coins worldwide under strict criteria such as a minimum market cap of $500 million, ownership concentration limits, and registration in recognized jurisdictions like the EU or New York State. This follows earlier circulars imposing stringent security standards for digital wallet management and capital requirements for crypto firms. Additionally, the Bank of Israel recently removed a significant barrier by canceling automatic delays on crypto-related deposits exceeding 100,000 shekels.

Industry leaders welcome the clarity and regulatory certainty. Nir Hirschman, CEO of the Israeli Crypto Companies Forum, noted that the new rules formalize practices already adopted by leading firms and expand the tradable crypto assets from 8-9 coins to 50. Ilan Shtrak, CEO of Horizon at Altshuler Shaham, emphasized that the regulatory framework aligns with international standards like New York’s NYDFS and the EU’s MiCA, encouraging banks to reconsider restrictive policies.

Alongside general crypto trading rules, the CMA is advancing regulation of stablecoins, digital assets pegged 1:1 to fiat currencies like the shekel or dollar. Stablecoins serve as infrastructure for payments and fast settlements rather than speculative investment. Globally, stablecoin transactions reached about $9 trillion annually, exceeding half of Visa’s yearly transaction volume. The CMA released a legislative draft on stablecoins in late June.

Complementing stablecoins is the Bank of Israel’s digital shekel pilot, a central bank digital currency (CBDC) designed to provide a digital cash alternative, enhance payment competition, and reduce transaction costs. Unlike stablecoins issued by private firms, the digital shekel is a state-backed liability. The pilot is underway, with a progress report expected by year-end. Together, these initiatives aim to create an integrated financial ecosystem that lowers costs and improves payment speed and security.

Eli Tubul, Senior Deputy to the Capital Market Commissioner, explained that adoption will be gradual and linear rather than sudden, emphasizing the importance of building clear regulatory infrastructure to enable seamless daily use. The goal is transparent integration of these digital financial services into everyday life for consumers and businesses alike.