‘Crypto’ lobby pushes for regulatory reform in Israel

Israel’s digital currency industry is rallying behind a new lobbying drive to relax regulatory rules and simplify tax rules for digital asset holders.

The lobbying drive was a hot topic at the Israeli Crypto Blockchain & Web 3.0 Companies Forum held earlier this month. Its key point appears to be an undisclosed report by KPMG, one of the Forum’s founding members, that suggests key reforms could add 120 billion shekels ($38.7 billion) to the economy and create 70,000 new jobs.

“The Israeli public is already there and the politicians need to act,” Nir Hirshman-Rub, Forum CEO, is quoted as saying at the event.

“More than 25% of the public already has had crypto dealings in the last five years and more than 20% currently hold digital assets.”

Among the reforms being floated are relaxing rules on stablecoins, tokenization, and tax.

Currently, Israel does not have an overarching, dedicated legal framework to govern digital assets, and instead, the industry largely fits within existing legislative structures.

For example, companies offering digital asset services may also be required to seek licencing under existing financial services rules. Similarly, gains on digital assets are treated as any other capital gain for tax purposes.

Though the research on the projected benefits of reform that were apparently circulated at the Forum has not been made publicly available, KPMG had earlier published a “state of the industry” report at the end of 2024. Pointing to large inflows ($405 million in capital raised by digital asset and Web 3.0 companies in 2024) and a consolidation of companies (a 7.5% decline in ecosystem companies between 2023 and 2024), the report painted the industry as transitioning to “infrastructure-led” maturity.

The Israel Central Bank released a “Principles for Stablecoin Activity” paper in 2023, advocating for dedicated rules for stablecoins to be introduced via legislation and inviting public feedback. Among the proposals are requirements that stablecoin issuers must hold sufficient reserve assets to cover 100% of their liabilities to holders and that issuers must hold a license.

Whether industry lobbying pays off, or if the promised benefits to the Israeli economy eventuate, remains to be seen.

Watch: Inside the London Blockchain Conference with Kurt Wuckert Jr.