Israel Publishes Long-Delayed Crypto Regulation Bill to Expand Oversight

After a delay of more than three years, the Israel Ministry of Finance has published a draft bill aimed at expanding the Israel Securities Authority's oversight over digital asset investments. Initially mandated by government decision number 204 in February 2023 to be published within 180 days, the legislation stalled despite a detailed proposal presented early that year by the ISA.

The memorandum seeks to extend the authority's regulatory reach beyond assets classified strictly as securities, requiring crypto exchanges, investment advisors, and portfolio managers to obtain proper licensing. Furthermore, the regulator will gain the power to establish rules regarding disclosure, risk management, and the safeguarding of client assets. However, the bill does not automatically classify all cryptocurrencies as securities, nor does it establish every final rule, meaning additional regulatory work will follow parliamentary approval.

Industry figures have offered mixed reactions to the delayed publication. Nir Hirschman-Rom, CEO of the Crypto Companies Forum, noted that the protracted timeline allowed Israeli legislation to gradually adapt following international developments, such as the European Union's MiCA regulation. Conversely, critics and the Capital Market Authority raised concerns over a lack of inter-agency coordination, warning of potential regulatory overlap and confusion regarding institutional boundaries.

Ilan Sterk, CEO of Horizon from Altshuler Shaham, welcomed the move while emphasizing the need for clear criteria in token classification and the avoidance of dual regulation. Meanwhile, the Israel Securities Authority stated that the current publication is designed to lay a comprehensive framework alongside stablecoin legislation, balancing investor protection with market innovation.