The Banking Supervision Department at the Bank of Israel has published the final version of the amendment to Proper Banking Conduct Directive 411, which governs the receipt of funds originating from virtual currency activities.
According to a report on the Bank of Israel website, the core of the amendment establishes a clear guiding principle under which a banking corporation shall not refuse to provide payment services solely because the source of funds is associated with virtual currencies. This major regulatory move follows approximately a year of consultations, in-depth discussions, and public comments, continuing a prolonged working process led by the Supervisor of Banks and the Israeli Crypto Companies Forum, which included roundtables and ongoing professional dialogue among the banking system, the regulator, and industry representatives.
The final text was formulated following a draft released for public comment last July. It is scheduled to take effect on May 1, 2027, with the Bank of Israel conducting an ex-post review of its implementation and effects five years after it comes into force.
Under the updated and binding directives, the blanket refusal policy practiced by banking institutions will be completely eliminated. Banks will be required to assess each transaction and request on its merits through a risk-based approach, taking into account customer characteristics, the identity of the service provider, the type of currency, and the volume and complexity of the transaction.
Among the key changes, the 100,000 shekel threshold has been abolished, licensed service providers will be recognized as a risk-mitigating factor, and clear rules have been established for accepting capital raised through token issuances, alongside provisions for stablecoins and a significant reduction in the bureaucratic burden imposed on these activities.
Nir Hirschman Rov, CEO of the Israeli Crypto Companies Forum, noted that this is one of the most significant changes in the sector, enabling the deposit of funds from digital sources into the banking system safely, efficiently, and quickly, while maintaining full compliance with anti-money laundering and counter-terrorist financing rules.
According to Hirschman, the change could reopen the market to an industry that has the potential to add 70,000 employees and 120 billion shekels to Israel’s GDP. He emphasized that the forum’s next objective is advancing comprehensive crypto reform in Israel during the first 100 days of the next government, modeled after the American approach, following a four-year professional battle with various regulatory bodies.
According to data from the Crypto Forum, approximately 95% of crypto turnover in Israel currently bypasses banks, and a survey by BDO indicated that around 80% of companies in the sector suffered direct losses due to the conduct of the banking system. This situation persisted even as roughly 1.5 million Israelis hold digital assets, and in 2025 alone, citizens withdrew two billion shekels from their bank accounts to purchase cryptocurrencies.
Yuval Roash, CEO of Bits of Gold, which operates crypto trading and the BILS stablecoin, welcomed the measure, stating that the directives fundamentally transform the rules of the game after years in which customers paid taxes according to the law but encountered barriers, adding that the true test of the regulation will now shift entirely to practical implementation by the banks.