Known for technological advancements, Israel is ripe and ready for change in its ever-evolving fintech space. A key ingredient of this evolution is the rapid adoption of the blockchain and broad access to the benefits that cryptocurrency has to offer.
While Israel continues to build a regulatory framework for increased cryptocurrency adoption, there’s still work to be done and progress to be made. However, this allows for a powerful and sustained growth trajectory in 2025 – and possibly even a path for Israel to move up the ranks among the world’s leading crypto-friendly regions.
Israel and Crypto Use: By the Numbers
As of 2024’s first quarter, Israel ranked 22nd in terms of cryptocurrency adoption among OECD nations. That might not sound very encouraging, but bear in mind that the U.S. ranked 37th on the list at that time.
Still, there is no denying that Israel has leeway for growth in 2025 and beyond. Per the Bank of Israel, only 3,000 private wallets with an Israeli connection hold Bitcoin, and most of those wallets contain assets totaling less than $10,000. Moreover, only around 60 wallets include Bitcoin in excess of $10,000.
Those aren’t the only statistics that one can cite, though. According to Statista, Israel’s crypto market is projected to “reach a revenue of” $254.9 million in 2024. Statista also expects the number of users in the Israeli cryptocurrency market to hit 3.65 million by 2025.
Plus, the Israeli Crypto Blockchain & Web3 Companies Forum reports that there are at least 174 blockchain-related Israel-based companies comprising approximately 3800 professionals. Besides, Israel is host to established digital asset platforms, such as Binance’s Peer-to-Peer (P2P) trading platform, where Israeli shekels can be traded for Bitcoin, Ethereum, and other assets.
Whichever facts and figures one might choose to cite, it’s undeniable that tech-savvy Israel has a presence on the global blockchain. In 2025, if the Bitcoin price trajectory resembles that of 2024, awareness could lead to increased adoption in Israel just as it could with other highly developed nations.
Clear Tax Law for Cryptocurrency
A foundational element of any pro-cryptocurrency national framework is clear-cut tax rules. Without that, properly regulated crypto-market investment is challenging, if not impossible. As Binance CEO Richard Teng explained in a recent Benzinga interview, “Close to one-third of global regulators now have frameworks for crypto. This clarity is critical for mass adoption.” Teng continued, “Institutions spend months conducting due diligence before entering this space. Now that the U.S. and global environments are more favorable, we expect even more institutions to onboard in 2025.”
Fortunately, the Israel Tax Authority (ITA) set a good precedent for regulatory clarity in the cryptocurrency space in 2018 when it issued Circular 5/2018. This publication effectively declared that virtual currencies are to be legally considered assets rather than currency.
With that, Bitcoin and other cryptocurrencies are to be classified as “financial assets” under Israeli tax law. Consequently, crypto profits are subject to a 25% capital gains tax rather than an income tax.
It might not always be as simple as that, since there’s more than one regulatory entity that oversees Israel’s cryptocurrency-related law. Notably, the Israel Securities Authority (ISA) separates crypto into three distinct subcategories: currency tokens (for use as a means of payment), security tokens (conferring rights of ownership or membership participation), and utility tokens (conferring rights to access or use a service or product).
Hopefully, there won’t be friction between Israel’s cryptocurrency oversight entities in 2025. For the time being, though, at least Israel’s crypto traders and investors can expect to pay a known and established tax on their profits – an essential piece of the puzzle for widespread adoption in the coming year.
Developing the “Digital Shekel”
Additionally, Israel has an opportunity to promote digital asset adoption in 2025 as the nation develops what’s informally known as a “digital shekel.” This would be Israel’s version of a central bank digital currency (CBDC), which the Bank of Israel defines as a “digital means of payment that, like cash, constitutes a central bank liability toward the holder of the currency.”
As of mid-December 2024, Israel’s central bank hasn’t officially made a decision about issuing or allowing a CBDC. This, however, sets up the possibility of a decision in 2025 – and a CBDC could be a version of cryptocurrency, even if it might not be entirely decentralized like Bitcoin is.
The prospect of Israel’s central bank directly encouraging cryptocurrency adoption may be exciting, but the jury is evidently still out on this issue. An Israeli CBDC is effectively still in the study phase, with the Bank of Israel determining, “a plan of action will be prepared that can be put into action in the future if conditions warrant it.”
With or without a CBDC in 2025, Israel’s cryptocurrency adoption curve can steepen due to the nation’s technological prowess and fairly accommodative regulatory framework. Thus, in the coming year and well afterwards, don’t be surprised if Israel makes its mark among the world’s top crypto-space contenders. Developing the “Digital Shekel”
Additionally, Israel has an opportunity to promote digital asset adoption in 2025 as the nation develops what’s informally known as a “digital shekel.” This would be Israel’s version of a central bank digital currency (CBDC), which the Bank of Israel defines as a “digital means of payment that, like cash, constitutes a central bank liability toward the holder of the currency.”
As of mid-December 2024, Israel’s central bank hasn’t officially made a decision about issuing or allowing a CBDC. This, however, sets up the possibility of a decision in 2025 – and a CBDC could be a version of cryptocurrency, even if it might not be entirely decentralized like Bitcoin is.
The prospect of Israel’s central bank directly encouraging cryptocurrency adoption may be exciting, but the jury is evidently still out on this issue. An Israeli CBDC is effectively still in the study phase, with the Bank of Israel determining, “a plan of action will be prepared that can be put into action in the future if conditions warrant it.”
With or without a CBDC in 2025, Israel’s cryptocurrency adoption curve can steepen due to the nation’s technological prowess and fairly accommodative regulatory framework. Thus, in the coming year and well afterwards, don’t be surprised if Israel makes its mark among the world’s top crypto-space contenders.