News Crypto in Israel Regulation and tax
Bank of Israel revises banks' crypto checks from May 2027
The Bank of Israel has amended Directive 411 to clarify that banks cannot refuse payment services solely because activity is connected with crypto, and to remove a mandatory check triggered by annual activity exceeding 100,000 NIS. Checks will instead depend on risk. Published on 7 October 2026, the amendment takes effect on 1 May 2027.
Checked on 31 October 2026.
For someone transferring crypto sale proceeds into an Israeli account, this is not a promise that every transfer will be accepted. It changes how the bank must assess the transaction. The service provider, asset, customer and transaction characteristics must inform that assessment, rather than the bank relying simply on a crypto connection or a fixed numerical trigger.
What has changed, and which activity is covered
The Supervisor of Banks' Circular 06-2862 (Opens in a new tab) amends section 87A of Proper Conduct of Banking Business Directive 411, concerning anti-money-laundering and counter-terrorist-financing risk management. Section 87A was added in 2022, so this revises an existing framework. The circular is addressed to banking corporations and holders of prudential payment service provider licenses.
The explanatory material emphasizes funds transferred from a virtual-currency service provider's account into the account of a bank customer who is not such a provider. A practical example is the proceeds of a sale on a trading platform being sent to a bank. This does not require the bank to offer crypto trading, open a wallet or hold digital assets for customers.
The restriction on blanket refusals also needs careful reading. A bank cannot rely solely on the fact that an activity involves crypto, but must still assess the risks of the particular transaction. A document request is not necessarily a refusal, and a platform's license does not automatically approve every transfer originating there. These are different elements of the assessment.
The 100,000 NIS trigger goes; risk management remains
The previous provision required examination of the funds used to purchase virtual currency or finance its mining, and of the currency's route, when related payment services exceeded 100,000 NIS a year. The amendment removes that numerical provision. It does not exempt every transaction from documentation or establish a new threshold below which checks cannot occur.
Instead, banks must set policies matching the depth of review to risk. The provider's identity, currency characteristics, customer profile, transaction size and complexity are relevant. Banks must also identify circumstances in which a route check is unnecessary. This distinction is intended to avoid applying the same requirements to every activity regardless of its circumstances.
As an illustration, two transfers of identical value need not require the same assessment if one has a continuous documentary history while the other contains unexplained movements between wallets. This is not a forecast of any particular bank's decision. It illustrates a move from a uniform numerical test toward the circumstances of the activity. A small transaction may still raise questions when its characteristics indicate risk.
Licensing can reduce risk; an obscured trail can increase it
The circular identifies an appropriately licensed Israeli provider as a risk-reducing factor. It also recognizes a provider incorporated in a foreign jurisdiction that is not considered risky and licensed in a jurisdiction that is not considered risky. Unsupervised providers and links to high-risk jurisdictions can increase risk. This is neither a recommended-platform list nor a guarantee that every foreign license will be treated identically.
The currency and its route matter as well. Anonymity-enhancing coins, mixers and technologies that obscure transfers appear among the risk factors. The examples are not exhaustive. The circular also says banks should not establish a closed list of currencies: their characteristics should inform the checks required under a risk-based approach.
A wallet's existence therefore does not explain the entire history of the funds. Understanding wallets and custody helps distinguish transfers between wallets controlled by one person from activity involving another provider. When explaining activity to a bank, a clear sequence of events may be more useful than a screenshot showing only the latest balance.
Documents and expert opinions should fit the transaction
A bank can review the route itself or use documentation from the customer, an Israeli-licensed provider or an outside specialist. The circular says a demand for an external specialist must also reflect risk. Banks must define situations where such approval is unnecessary, including where existing checks or documents already provide a high degree of certainty.
A practical preparation method follows: retain purchase and sale confirmations, platform activity records, transfer dates and transaction identifiers, then connect them into a coherent explanation. This is an organizational suggestion, not a universal mandatory checklist imposed on every customer by the circular. Before a transfer, customers can ask which conditions apply and which documentary gap needs to be filled.
The amendment also requires effective, clear and accessible disclosure of the bank's principal policies. Customers should be able to understand the conditions under which services will generally be available. This information is not advance approval of a transaction, but should help explain what the bank needs before documents are repeatedly exchanged without a clear reason.
Token issuance, tax and commencement are separate questions
Funds raised through an initial virtual-asset issuance, such as an ICO, are subject to considerations involving the issuance, token, issuing jurisdiction and applicable law. This part concerns proceeds of the initial issuance, rather than secondary-market trading. Selling a token previously bought on a platform does not make the seller an issuer simply because the asset originally came from an issuance.
The amendment does not itself change tax liability on crypto gains. A bank accepting funds and a taxpayer meeting tax obligations are separate matters, although records may be relevant to both. The guide to crypto tax in Israel explains the distinction between activity, gains and reporting. A bank's transfer approval is not approval from the Israel Tax Authority.
As of 31 October 2026, this is a final amendment with a future commencement date. Removal of the threshold should not be presented as an exemption already in force. Before 1 May 2027, the previous wording and the circumstances of the transaction remain relevant. Useful preparation now means understanding the bank's policies and retaining records that can be explained, without treating a reform headline as a substitute for an individual assessment.