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Israel: crypto & digital assets regulation

Partially regulated

Israel: Crypto assets restricted for banks; no dedicated VASP licensing regime

Lead regulator:
Bank of Israel
Key law:
Anti-money Laundering Law (2000)
Last updated:
2026-07-12

Israel does not currently have a dedicated licensing regime for Virtual Asset Service Providers (VASPs). Instead, the Bank of Israel strictly regulates traditional financial institutions' exposure to crypto assets through prudential and AML/CFT directives.

Banking corporations are prohibited from engaging in crypto activities without exercising utmost caution, facing enhanced AML/CFT requirements and risk management obligations. The regulatory focus remains on mitigating risks within the traditional banking sector rather than licensing new crypto entities.

The primary legal framework relies on existing anti-money laundering laws, with the Bank of Israel issuing circulars to enforce strict compliance. There is no specific capital floor or timeline for a dedicated crypto license established in the provided documents.

Who regulates

  • Bank of Israel

    Primary supervisor of banking corporations and acquirers regarding crypto-related risks and AML/CFT compliance

    [1][2]

Core laws & rules

  • Anti-money Laundering Law (2000)

    The foundational law under which virtual currency activities are regulated for AML/CFT purposes, as amended by Bank of Israel directives.

    [2]

Restrictions & warnings

  • Banking corporations and acquirers must exercise utmost caution regarding cryptographic assets due to prudential, cyber, and consumer protection risks.

    [1]

  • Enhanced AML/CFT controls are required, including periodic risk assessments and specific policies for handling virtual currency transactions.

    [2]

Direction of travel

  • Regulatory direction emphasizes strict risk management and AML/CFT compliance for traditional financial institutions interacting with crypto assets.

    [1][2]

Sources

  1. Bank of Israel Circular C-06-2741: Amendments to Proper Conduct of Banking Business Directive No. 310 on Risk Management · 2023-02-26
  2. Management of AML/CFT Risks in Virtual Currency Activities · 2022-05-09

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This guide is compiled automatically from 2 primary-source documents published by Israel's regulators, reviewed by RegAlert, and refreshed monthly (last updated 2026-07-12). It is not legal advice — always confirm requirements with the regulator or local counsel before acting.