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Crypto Exchanges& Regulation in Israel

Top exchanges in Israel by Coincub criteria
Article review author
Jonathan Lea
Israel head image

Crypto Country Rating: 7.4/10

Institutional acceptance
Positive but complex tax policy around trading
Exchanges & Wallets availability
Leading exchanges available
Government regulation
complex tax laws for crypto trading, but positive towards blockchain
Defi acceptance
Full on DeFi still a matter of debate
Financial services
Huge take up of finTech innovations
Strict compliance laws.
Spending crypto
lots of retailers accept bitcoin and numerous ATMs.
Banks activity in crypto
Cautious outlook bordering on negative stance

Bitcoin and crypto trading in Israel

Israel is one of Coincub’s middle-ranking crypto countries but has recently implemented new rules that will enable Israeli banks to process gains from digital currency trading without becoming embroiled in the country’s strict but entirely necessary anti-money laundering legislation. This is a very positive step forward and adds immeasurably to the state of the crypto-economy.

This move effectively adds credence and confidence to the fintech sectors including crypto-related companies. The crypto and financial sector will be subject to requirements designed to prevent them from being conduits for money laundering or possibly terrorism and will clear the ground for the issuing of licenses to those companies dealing in bitcoin and other digital assets. Also included are clear rules for the electronic transfer of money and digital currency within Israel and outside it. Whilst the licensing process has been described as too slow in some quarters, the regulating body, the Commissioner of Capital Markets, Insurance and Savings, is processing the license applications of the many crypto services agencies on an ongoing basis.

Despite the lackluster crypto appetite, like so many countries now, Israel is a firm blockchain advocate and builds on the country’s high-tech traditions. There appears to be huge potential for the concept outside of the financial sector – in cybersecurity, for example. In terms of tax, bitcoin sellers will have to pay a capital gains tax of 25% each time a bitcoin is sold and miners are liable for corporate income tax as well as a 17% VAT charge.

Overall, Israel has failed to ‘take-off’ in the crypto rankings and has a not particularly high score for many of Coincub’s ranking criteria. The number of people holding crypto is average, so too are the trading volumes and numbers of ATMs. Even the Google search score for crypto information is average to low, so it would seem as if the country is not being pushed by demand, or perhaps awaiting more positive encouragement which should result from widespread licensing.

Spend Bitcoin and cryptocurrency trading in Israel

Israel is home to an active cryptoeconomy with a very large bitcoin meet up group. A taxation policy that puts the owness on individuals to report their crypto holding has not stemmed the interest in buying, selling or spending crypto. Tel Aviv has a high number of retailers and ATMs that accept and exchange bitcoin.

Law and crypto trading in Israel

Israel has applied particularly stringent taxation requirements on cryptocurrency and recently its financial authorities have been actively bringing clearer and more sophisticated regulation to bear on cryptoeconomy investments. A Bill requiring all crypto holding over 61k to be reported to the tax authority and more comprehensive money laundering requirements are also to be applied to virtual currency service providers. The country’s first bitcoin-linked bonds trade on Israel’s exchange trading platform for private companies.

Paying tax on my crypto trading in the Israel

The taxation policy around crypto is built around the definition of crypto as an asset. Taxation reporting guidelines appear to be unstreamlined (that means ‘confusing’ to you and me) with the likelihood of capital gains tax (25%), income tax (up to 50%), value added tax (17%) all applying to your gains, depending upon circumstances. Of late the Israeli Tax Authority has made concerted efforts to contact individuals to disclose their cryptocurrency holdings and be taxed accordingly. Further disclosure requirements have also been asked of locally based and overseas exchanges operating in the country.

Tax relief, changing residency and gifting crypto coins Israel

Investors in cryptocurrency will be subject to a 25% capital gains tax, if their activity does not become an ongoing commercial enterprise. Move into the heady realms of a commercial enterprise will incur a two-stage corporate tax or a marginal tax.

Crypto mining regulations in Israel

Thinking of mining crypto? It’s a highly technical and expensive activity at the best of times, involving powerful computers – and lots of energy – but it is legal in Israel. Mining, or any business that looks to generate bitcoins or other cryptocurrency tokens will be taxed, just as any other factory in Israel, depending on the volume of its activity.

Planning your retirement and investing in cryptocurrency in Israel

Israel’s Capital Market, Insurance and Savings Authority requires insurance companies and investment houses to declare and justify any bitcoin-linked investments. Bitcoin, a speculative asset, is seen to have no intrinsic value and caution is constantly advised by banks and authorities.

Israel’s Financial services’ outlook on Bitcoin and crypto economy

The high taxation and apparent consolidation over the definition and nature of cryptocurrency is compounded by a largely negative stance by the banking sector which refuses to deal with cryptocurrencies or accept fiat funds from crypto exchanges. Some banks have been known to refuse to broker payments for services rendered between blockchain companies and contractors. Perhaps the growth of the cryptoeconomy is seen as untenable competition – and the thin end of the wedge. Financial authorities have been tightening crypto regulations around crypto, requiring holdings of more than $61,000 to be reported to the tax authority, however, crypto trading is uninhibited even without widescale participation by the banking sector.

Israel and DeFi: the latest developments

Israel is big on blockchain and has a booming tech sector that is highly motivated by the opportunities such technology holds. Blockchain technology is now being investigated across a variety of sectors and industries, especially in relation to applications for SMEs and entrepreneurs. There is much positive debate on how this new technology will impact the future of companies and the prosperity that blockchain solutions offer. Despite its rather complex tax policy on crypto holdings, the Israeli government is very keen on the development of the blockchain industry and provides willing cooperation through bodies such as The Bank of Israel, The Ministry of Finance, and the Small and Medium Business Agency.

Crypto security, transparency and compliance in Israel

Anti-money-laundering (AML) regulations are wide ranging and applied to any cryptocurrency related activity. AML procedures can, however, take an inordinate amount of time, with relevant companies waiting for official approval of their AML procedures. The country’s priority is fighting terrorism and money laundering, but there is little in the way of recourse for being the victim of fraud or loss so it is strongly advisable to make your own checks regarding the exchanges and wallets you want to deal with. Some have insurance against loss and some have good security records, so it is more than sensible to do a little homework.


New to crypto? Here’s our guide!

FAQ Image #1 01 Why Bitcoin? It seems like the buzz around Bitcoin just keeps growing. Bitcoin is a constantly evolving technology with a passionate community. What is it about the digital asset that makes it such a controversial topic and attractive investment?
FAQ Image #2 02 How to Get Started with Bitcoin It can be difficult to get past the technical jargon surrounding bitcoin (BTC) and other cryptocurrencies in order to figure out how you can buy and store them. Beginners can purchase Bitcoin, for example, on many exchanges using fiat currency like U.S. Dollar, Euro or British Pound.
FAQ Image #3 03 Blockchains 101 Blockchains are a type of database where data is stored in blocks that are chained together. As new data comes in, it is entered into a block, which is then chained to the previous block. The Bitcoin blockchain serves as a ledger that records every Bitcoin transaction in history.
FAQ Image #4 04 Bitcoin in the Real World Ok - you’ve found an exchange, bought your Bitcoin, and stored it safely. What’s next? By now you can buy just about anything with Bitcoin if you try hard enough, from Amazon gift cards to an old master painting. You can also convert your BTC to fiat with ATMs, an exchange, and more.

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