Israel Compliance Report

Regulatory Overview

Regulatory Status

Dedicated crypto/VA legislation, licensing regime, active enforcement

Key Regulator(s)

Bank of Israel, National Crypto Strategy Committee, Israeli Securities Authority

Risk Level

medium

Primary Legislation

Financial Asset Service Providers Regulation Law (2023), ISA proposed amendments to the Israeli Securities Law to categorize tokens (e.g., ISA committee evaluating decentralized offerings; ongoing stablecoin regulation, Supervision of Financial Services (Regulated Financial Services) Law: Core licen, Banking Law, 5737‑1977 (as amended), Securities Law, 5739‑1979, Money Laundering Prevention Law, 5740‑1980, No comprehensive crypto-specific law yet; reforms sought via National Crypto Str, Proposed ISA amendments to Securities Law: To regulate digital assets by categor, No full dedicated crypto law as of 2025-2026 sources; regulation evolves via exi, Stablecoin Ordinance, Anti-Money Laundering Ordinance (amended 2023) requires licenses for crypto exch, per AML Ordinance, A Look at the World Map of Crypto Regulation as Policy Easing is...: Offers a gl

Travel Rule

Adopted — Threshold: Implemented

Tax Reporting

25% capital gains tax on crypto; Israel Tax Authority treats crypto as property. Gains from selling, exchanging, or disposing of cryptocurrencies are taxed at 25% for individual investors, calculated as the difference between acquisition cost and sale proceeds (using fair market value at receipt for mining), subject to potential inflation adjustments per Israeli capital gains rules.. Under recent Israeli Tax Authority Circular No. 10/2025, capital losses are recognized but the method of offsetting against gains has been revised; taxpayers must consult the circular for the updated procedure and must still maintain records on their tax returns.. This treatment stems from ITA circulars since 2014, viewing crypto as an "asset" under the Income Tax Ordinance (New Version), 1961.. For individuals holding as investments: Capital gains tax at 25%.

Key Facts

• aml Screening Obligations: VASPs must screen customers, counterparties, wallets, and transactions against these lists using integrated KYC, transaction monitoring, and blockchain analytics; OFAC may list specific crypto addresses on the SDN List, requiring blocking of associated assets. Crypto Travel Rule Alignment: Under FATF standards adopted in Israel, VASPs comply with Travel Rule-like requirements for transfers, including counterparty sanctions verification; EU's Regulation (EU) 2023/1113 (MiCA-related) influences via cross-border operations, applying to all qualifying crypto transfers without thresholds since December 2024.
• general CMISA (中国移动互联网协会) is a key industry association in China’s mobile internet sector. For Financial Asset Service Provider (FASP) licensing, CMISA often collaborates with regulatory bodies like the People’s Bank of China (PBOC) or China Banking and Insurance Regulatory Commission (CBIRC). Always verify the latest updates directly on their official site, as URLs or subdomains may change.
• licensing ISA — Securities regulation, crypto oversight CMISA — Financial Asset Service Provider licensing Israel Money Laundering Prohibition Authority — AML/CFT compliance Financial Asset Service Providers Regulation Law (2023) — FASP licensing covering crypto exchange, custody, portfolio management. Framework matured 2023-2024 after years of uncertainty. VASP: Financial Asset Service Provider (FASP) License from ISA/CMISA. ILS 300,000-1,000,000 (~$80K-$270K USD) depending on activity type. 6-12 months. Banking sector gradually opening after landmark court cases and Bank of Israel guidance. CUSTODY: Included under FASP license; customer asset segregation required EXCHANGE: FASP license. Strong crypto startup ecosystem but banking access historically challenging. Being an Israeli citizen/resident of legal age, legally competent, and not bankrupt (for individuals); or solvent for corporations.
• securities Israel Securities Authority (ISA), established in 1968 (MoneyWiki). Securities Law, 1968 – Foundational legislation establishing the ISA and defining its mandate (MoneyWiki). Investment Advisors Law, 1995, Mutual Funds Law, 1994, Capital Market Law – Additional statutes governing securities activities (MoneyWiki). ISA is a member of the International Organization of Securities Commissions (IOSCO) and aligns with global standards for AML/CFT compliance (IMF Article). Non-bank payment companies and initiation providers under the 2023 Payment Services Law (Prifinance). Crypto trading entities through traditional capital market participants (ISA “closed garden” model, August 2024) (MoneyWiki). Annual fees range from ILS 16,940 to ILS 86,810 by category, set per ISA directives (Prifinance). Structured submission of programme of operations, safeguarding measures, insurance documentation, and technology compliance files.
• status Israel Securities Authority (ISA): Oversees security tokens, Initial Coin Offerings (ICOs), trading platforms, investment advice, and fund management; actively pushes legislative changes and regulates the Israeli Stock Exchange, which lists crypto-involved companies. Capital Market, Insurance, and Savings Authority (CMISA): Issues licenses to digital asset service providers, enforcing anti-money laundering (AML), financial stability, and consumer protection standards. Israel Tax Authority (ITA): Treats cryptocurrencies as a "means of virtual payment" subject to capital gains tax (not exchange fluctuation); miners are "dealers" liable for VAT, and business traders are "financial institutions" facing 17% profit tax plus inability to reclaim VAT on expenses. Bank of Israel (BOI): Issued warnings on risks like fraud and money laundering (2014 statement); does not recognize crypto as legal tender (2018); handles temporary tax payment procedures for crypto profits when banks refuse funds due to AML concerns. National Crypto Strategy Committee: Delivered an interim report in July (year unspecified, likely 2025) to the Knesset, proposing five pillars: centralized regulator, token issuance guidelines, banking integration, and more. Supervision of Financial Services (Regulated Financial Services) Law 5776-2016: Defines "financial assets" to include virtual currency; mandates licenses from the Supervisor of Financial Services for related activities (e.g., for Israeli citizens/residents of legal age, not bankrupt). No comprehensive crypto-specific law yet; reforms sought via National Crypto Strategy Committee's July interim report, advocating unified authority and stablecoin/tokenization rules. Temporary Procedure (date unspecified): Allows tax payments on crypto profits from foreign accounts to BOI when Israeli banks refuse due to tracking/ML risks.
• tax 25% capital gains tax on crypto; Israel Tax Authority treats crypto as property Gains from selling, exchanging, or disposing of cryptocurrencies are taxed at 25% for individual investors, calculated as the difference between acquisition cost and sale proceeds (using fair market value at receipt for mining), subject to potential inflation adjustments per Israeli capital gains rules. Under recent Israeli Tax Authority Circular No. 10/2025, capital losses are recognized but the method of offsetting against gains has been revised; taxpayers must consult the circular for the updated procedure and must still maintain records on their tax returns. This treatment stems from ITA circulars since 2014, viewing crypto as an "asset" under the Income Tax Ordinance (New Version), 1961. For individuals holding as investments: Capital gains tax at 25%. For business activities (frequent trading, mining): Taxed as ordinary income at marginal rates up to 53%, with mining income includible at fair market value on receipt date. Payments in crypto for wages or services follow standard property payment rules, subject to withholding and reporting. Individual investors: No VAT on gains or trades.
• travel rule Travel Rule adopted — threshold: ILS 5,000 The exact effective date of implementation in Israel Israel's specific threshold amounts for Travel Rule compliance Which VASPs are covered under Israeli regulations Technical implementation requirements specific to Israel Penalties for non-compliance under Israeli law Direct links to Israeli legislation or regulatory guidance

Sources

• https://www.cmisa.org.cn
• https://isa.gov.il
• https://mof.gov.il
• https://justice.gov.il
• https://barlaw.co.il/crypto-custody-services-and-regulation-a-review/
• https://practiceguides.chambers.com/practice-guides/blockchain-2025/israel/trends-and-developments
• https://boi.org.il/media/aoxh4ezf/%D7%9E%D7%A1%D7%9E%D7%A9-%D7%A2%D7%A7%D7%A8%D7%95%D7%A0%D7%95%D7%AA-%D7%9C%D7%A4%D7%A2%D7%99%D7%9C%D7%95%D7%AA-%D7%9E%D7%98%D7%91%D7%A2%D7%95%D7%AA-%D7%99%D7%A6%D7%99%D7%91%D7%99%D7%9D-%D7%9E%D7%AA%D7%95%D7%A8%D7%92%D7%9D-%D7%9C%D7%90%D7%A0%D7%92%D7%9C%D7%99%D7%AA-002.pdf
• https://www.lightspark.com/knowledge/is-crypto-legal-in-israel
• https://freemanlaw.com/cryptocurrency/israel/
• https://www.legal500.com/guides/chapter/israel-blockchain-crypto-assets/?export-pdf
• https://www.boi.gov.il
• https://www.isa.org.il/English
• https://www.gov.il/en/departments/units/licensing_department
• https://legacy.export.gov/article?id=Israel-Licensing-Requirements
• https://www.ssrn.com/abstract=4174699
• https://www.gov.il/en/pages/regulated_professions
• https://www.trade.gov/country-commercial-guides/israel-licensing-requirements-professional-services
• https://moneywiki.app/regulators/israel-securities-authority
• https://elibrary.imf.org/view/journals/002/2012/087/002.2012.issue-087-en.xml?cid=25849-com-dsp-crossref
• https://prifinance.com/en/payments/israel-payment-license/
• https://referenceworks.brill.com/display/entries/FLG/COM-103153.xml
• https://www.gov.il/en/departments/israel_securities_authority/govil-landing-page
• https://www.globallegalinsights.com/practice-areas/blockchain-cryptocurrency-laws-and-regulations/israel/
• https://www.gov.il/en/pages/faq-digital-assets
• https://www.sfc.gov.hk/english
• https://www.sfc.gov.hk/enforcement-regulations/stablecoin-ordinance
• https://www.sfc.gov.hk/enforcement-regulations/anti-money-laundering-ordinance
• https://www.sfc.gov.hk/press-releases/2023/10/quarterly-regulatory-bulletin
• https://www.sfc.gov.hk/enforcement-regulations/tax-treatment-crypto-assets
• https://www.dangel-law.co.il/en/regulating-the-status-israeli-citizens-foreign-national-spouses-children/
• https://publications.iadb.org/en/regulatory-framework-telemedicine-current-status-and-next-steps
• https://agentsbooks.com/public/agents/israel-market-expansion
• https://www.panewslab.com/en/articles/nbl2k928
• https://www.bloomsburycollections.com/monograph-detail?docid=b-9781472565648&tocid=b-9781472565648-chapter3
• https://osf.io/vbh7q
• https://adsly.pro/guides/telegram-ads-in-israel/
• https://www.gov.il/en/departments/israel_tax_authority
• https://taxsummaries.pwc.com/israel/individual/taxes-on-personal-income
• https://taxsummaries.pwc.com/israel/corporate/taxes-on-corporate-income
• https://www.gov.il/en/pages/sa270225-1
• https://taxnews.ey.com/news/2025-2228-israeli-tax-reform-aims-to-accelerate-growth-in-high-tech-sector
• https://www.trade.gov/country-commercial-guides/israel-import-requirements-and-documentation
• https://www.privacyshield.gov/ps/article?id=Israel-Joint-Ventures