Israel to Regulate Stablecoins: New Draft Bill on Stablecoin Licensing and Supervision

Origins of the Draft Bill

On June 29, 2026, the Ministry of Finance and the Capital Market, Insurance and Savings Authority published for public comment the draft Supervision of Financial Services Law (Issuance of Stablecoins), 2026.

The bill was prepared pursuant to Government Resolution 204, dated February 24, 2023, which was adopted following a report by the Ministry of Finance’s Chief Economist, and which authorized the Minister of Finance to designate the regulatory authority responsible for the stablecoin sector.

On December 10, 2024, it was determined that responsibility would be assigned to the Commissioner of the Capital Market, Insurance and Savings Authority.

Until now, Israel’s stablecoin sector has operated without a dedicated legislative framework, despite its significant global scale, with more than 200 stablecoins worldwide at an aggregate value exceeding USD 300 billion and a monthly transaction volume of approximately USD 2 trillion.

Innovations in the Draft Bill on Stablecoin Regulation in Israel

For the first time, the bill would require stablecoin issuers to obtain a license and would impose several additional material obligations:

• Issued coins must be fully backed (at a 1:1 ratio) by liquid and low-risk reserve assets held by financial institutions (such as banks) that are segregated from the issuer’s assets and out of the reach of creditors in the event of insolvency.
• Coin holders have the right to redeem their coins immediately and without a fee.
• Issuers must publish a “whitepaper” in Hebrew at least 30 days prior to an issuance.
• Issuers must establish a corporate governance framework that includes a board of directors, CEO, independent auditor, and independent compliance officer.

Another key innovation in the bill is its application to foreign issuers. The law would also apply to corporations issuing stablecoins outside Israel if they target customers who are residents of Israel, even without any physical presence in the country.

The bill sets out a list of indicators for determining whether an entity is targeting residents of Israel, including the ability to provide an address in Israel, outreach to customers in Hebrew, the offering of a shekel-linked coin, or cooperation with a local financial services provider to make the service accessible. However, this is an open-ended list, meaning that activities not expressly identified may still be deemed to target the Israeli market, depending on the overall circumstances.

The bill also proposes a dedicated licensing track for foreign issuers, allowing them to obtain an Israeli license even without being incorporated in Israel, provided that the Commissioner is satisfied that the foreign law applicable to the issuer adequately addresses the matters covered by the standard Israeli licensing requirements and that effective enforcement against the issuer is possible, regardless of whether its control and management are exercised in Israel.

Importantly, this is not an exemption from licensing, but rather a tailored licensing track subject to the Commissioner’s discretion and consideration of the public interest.

Implications for International Issuers, Fintech and Crypto Companies, and Exchanges

Taken together, these two licensing arrangements create a reality in which even major international issuers may need to reassess their exposure to the Israeli market. Tether and Circle, which issue USDT and USDC, the world’s two largest stablecoins, already serve Israeli users engaged in crypto trading, money transfers, and other financial activities.

If those activities are deemed to target Israeli residents under the tests set out in the draft bill, these companies may find themselves required to operate under an Israeli license or, at a minimum, to consider appropriate regulatory preparations. Notably, the draft bill does not expressly resolve this issue, and it will likely remain a key question as the bill moves toward finalization.

For crypto platforms, exchanges, and fintech companies that reach Israeli customers as part of a broader global customer base, the bill serves as a reminder to reexamine how they target the Israeli market.

The bill is expressly based on standards drawn from US legislation (including the GENIUS Act) and from the EU’s Markets in Crypto-Assets (MiCA) Regulation, while adapting them to Israel’s regulatory landscape. Since MiCA likewise applies to issuers and crypto service providers that target the European market, the Israeli approach reflects a broader global trend toward targeting-based, rather than purely location-based, regulation.

Recommendations

This is a significant regulatory development that could affect the operations of stablecoin issuers, crypto platforms, fintech companies, and technology companies that target customers in Israel.

At this stage, relevant companies should consider the bill’s implications for their operations, including whether their activities could be deemed to target the Israeli market, whether they are likely to become subject to an Israeli licensing requirement, and what regulatory or business adjustments may be needed.

Given the complexity of the proposed framework and its potential implications, companies should consider seeking advice at an early stage from experienced legal counsel with expertise in these areas and, where appropriate, submitting comments on the draft bill.

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Adv. Efrat Cohen is a senior partner and head of the firm’s Regulation Department.

Adv. Avihai Tal is an associate in the firm’s Regulation Department.

Barnea Jaffa Lande’s Regulation Department regularly advises fintech companies, financial institutions, technology companies, and leading players in the digital asset sector on regulation, licensing, compliance, corporate governance, innovative financial products, and the regulation of activities in Israel and international markets.