Is Crypto Legal in Israel?

Cryptocurrency is legal in Israel and classified as financial assets under the Supervision of Financial Services Law enacted in 2016. Cryptocurrencies are not treated as money or given equal status to domestic or foreign fiat currency. In 2018, the Israel Tax Authority issued Circular 5/2018 stating that virtual currencies are considered assets and not currency, subjecting sales of digital assets for profit to capital gains tax at twenty-five percent rather than income tax (1).

The Israeli government recognizes the need to establish a comprehensive regulatory framework for cryptocurrencies and tokenized securities, acknowledging risks including money laundering, potential financial instability, privacy concerns, fraud and unique market risks inherent to the crypto industry. Entities providing financial asset services including sale of cryptocurrencies require licenses from the Capital Market Insurance and Savings Authority under the Financial Services Law. So far, only a few companies have secured licenses including Bits of Gold, Hybrid Bridge Holdings, and Bit2C (1).

"From the Israeli government's perspective, cryptocurrency is not deemed an acceptable means of payment and is primarily used for financial investment purposes."

The Bank of Israel is actively progressing with its Central Bank Digital Currency initiative termed the Digital Shekel. In May 2024, the Bank launched a Digital Shekel test environment inviting participation in the Digital Shekel Challenge. The Digital Shekel will facilitate advanced payment applications with immediate and final transactions, lower fees than existing digital payment methods, enhanced privacy, and offline operation capabilities, fundamentally distinct from cryptocurrencies by representing a commitment ensuring stable value like physical cash (2).

Source:
https://www.globallegalinsights.com/practice-areas/blockchain-cryptocurrency-laws-and-regulations/israel/
https://www.boi.org.il/en/economic-roles/payment-systems/future-payment-methods/digital-shekel-cbdc/

Last updated: 18-10-2025 Disclaimer: This article does not provide legal advice. If you need legal advice, please contact an attorney directly.