Israel's Capital Market, Insurance and Savings Authority (CMASA) has published binding crypto guidelines, requiring all licensed Virtual Asset Service Providers (VASPs) to comply within six months. The move, announced this week, marks a formal step in the country's regulatory approach to digital assets, alongside a separate easing of crypto-related restrictions by the Bank of Israel.
What the guidelines require
The CMASA rules apply to firms already holding a VASP license under Israel's anti-money laundering regime. They cover operational standards, custody requirements, and risk management for crypto activities. The authority said the framework is designed to bring clarity to a sector that has operated under interim rules since 2022.
VASPs must now meet specific capital adequacy thresholds, maintain segregated client accounts, and submit regular audit reports. The guidelines also mandate disclosure of fees and risks to retail customers. Non-compliance could result in license suspension or revocation.
Bank of Israel eases restrictions
Separately, the Bank of Israel has relaxed its stance on crypto-related banking services. Previously, many banks refused to open accounts for crypto firms or blocked transactions linked to digital assets. The central bank's new policy encourages banks to assess applications on a case-by-case basis rather than applying blanket bans.
The shift follows months of dialogue between regulators and industry participants. The Bank of Israel said it aims to balance innovation with financial stability, and that the updated guidance reflects international standards from the Financial Action Task Force.
Six-month compliance window
VASPs have until late January 2027 to align their operations with the CMASA guidelines. The regulator said it will conduct inspections after the deadline and may grant limited extensions for firms that demonstrate good-faith efforts but face technical hurdles.
Industry groups have broadly welcomed the clarity, though some smaller firms have raised concerns about the cost of compliance. The Israel Crypto Association, which represents several licensed VASPs, said it is reviewing the rules and plans to issue guidance for members.
The dual regulatory push — binding rules from CMASA and a more open stance from the central bank — signals that Israel is moving toward a more structured crypto ecosystem. The next concrete milestone is the January 2027 deadline, when all licensed VASPs must show they meet the new standards.
