"Without a reform, there will be no crypto industry left in Israel"
Nir Hirshman, CEO of the Crypto Companies Forum, warns that Israel needs a comprehensive regulatory reform. He argues that without removing barriers, the country risks losing the industry and billions of shekels in GDP.
Nir Hirshman, CEO of the Crypto Companies Forum: "In recent months, we have seen a regulatory blitz by the Capital Markets Authority and the Bank of Israel to promote the regulation of the industry. The steps are welcome, but Israel is significantly behind. In the US, supervisory authorities openly declare that the policy goal is to provide regulatory certainty and bring entrepreneurs back to the country. They have connected licensed crypto exchanges to the federal clearing system, exempted self-custody wallets from broker regulation, and regulated legislation to allow companies to buy American bonds. In Israel, crypto companies still face difficulties in opening bank accounts and receiving funds. In the field of taxation, employees pay double tax on options, and foreign investors are exposed to the risk of double taxation. As a result, Israeli entrepreneurs are currently setting up successful companies abroad. When the US offers a stable business environment and clear regulation, entrepreneurs prefer to operate from there."
And what is the impact of this gap on the Israeli economy? "We commissioned a research model from KPMG, and the findings were unequivocal: removing regulatory barriers by the state will yield an additional 110-120 billion shekels to the GDP within a decade and create 70,000 jobs. Continuing the current situation will cost the economy a loss of product of 50-90 billion shekels and will fix the industry at 4,000-5,000 employees. Unlike the AI sector, which requires huge investments in infrastructure, electricity, and data centers, growth in crypto requires mainly policy decisions and the removal of barriers."
So what should the government do? "A package of legislation is required within the framework of the upcoming Economic Arrangements Law, a comprehensive crypto reform for Israel. The government already decided in 2023 on the necessity of a Digital Assets Law and a Stablecoins Law, but the legislative processes are stuck. It is necessary to consolidate the bills that are already agreed upon, include them in the Economic Arrangements Law, and complete them in the first 100 days of the government. In 2023-2024, the number of crypto companies operating in Israel decreased by 5%, and we are witnessing a constant exodus of programmers and technology leaders abroad. In the absence of a comprehensive reform in the upcoming Economic Arrangements Law, the local industry will simply empty out."
