Is crypto legal in Israel?

Tax treatment

Financial/taxable 'asset' — explicitly not legal tender or currency — under the Income Tax Ordinance and ITA Circular 5/2018. Individual (non-business) investors are not liable for VAT; mining or business-classified trading can trigger VAT dealer registration.

Profit from selling cryptocurrency is taxed as capital gains at a flat 25% rate for individual investors, per Israel Tax Authority Circular 5/2018, which treats virtual currency as a taxable 'asset' under the Income Tax Ordinance rather than as currency. High earners face an added surtax: under Section 121B, taxable capital income above ILS 721,560/year (2025 threshold) carries an extra 5% surtax, pushing the effective top marginal rate on large crypto gains toward roughly 30%. If activity is instead classified as a business — frequent professional trading or mining — it's taxed as ordinary income at marginal rates up to 50%, and VAT dealer status can apply.

Registration with the Israel Tax Authority is required, and crypto-to-crypto exchanges are themselves taxable disposal events that must be reported — not just crypto-to-fiat cash-outs. A voluntary disclosure procedure (published August 25, 2025, open through August 31, 2026) allows retroactive reporting of unreported crypto income with reduced penalty exposure.

Can banks handle crypto here?

There's no legal ban on banks serving crypto customers, but Israeli banks have a long, well-documented history of refusing or restricting accounts linked to crypto activity, citing AML risk — the landmark case dates to 2015, when Bank Leumi closed crypto broker Bits of Gold's account, a closure Israeli courts upheld in 2017. No binding Bank of Israel directive compels banks to serve crypto customers; each bank sets its own risk policy, and disclosure of crypto dealings still commonly triggers friction or refusal.

Buying and selling crypto in Israel

Since August 2024, the ISA has allowed non-bank Tel Aviv Stock Exchange (TASE) members — regulated brokerages and investment firms — to offer crypto trading and custody directly through ordinary investment accounts, a channel currently limited to Bitcoin and Ethereum. This gives Israeli investors a bank-adjacent, regulated on-ramp that largely sidesteps direct bank-account friction. Outside that channel, individuals funding international exchanges via bank wire commonly face extra compliance questioning from their own bank.

Authority sources used

Outbound links are included for verification and entity authority, not decoration. Every claim on this page traces back to one of these.

• Digital Assets — FAQIsrael Tax Authority (gov.il)
• Israel to Tax Cryptocurrencies as Capital Asset, not CurrencyAboulafia CPA
• High-Income Earners in Israel Prepare to Pay an Additional SurtaxBarnea Jaffa Lande (law firm)
• Israel — Individual, Income determinationPwC Worldwide Tax Summaries

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