Crypto Industry Pushes for Major Regulatory Reform in Israel

According to reports, the ICCA, led by CEO Nir Hirshman, is advocating for a more favorable regulatory environment to prevent the exodus of local talent and capital. The association highlighted data suggesting widespread local adoption of digital assets. “More than 25% of the public already has had crypto dealings in the last five years and more than 20% currently hold digital assets,” Hirshman reportedly stated at the event. The group is proposing specific changes, including more relaxed rules around asset tokenization.

The ICCA’s push is supported by a “state of the industry” report from late 2024, which presented the following metrics:

• Public Crypto Exposure: Over 25% of the Israeli public has engaged with crypto in the past five years (association claim).
• Current Crypto Holdings: More than 20% of the public currently holds digital assets (association claim).
• 2024 Web3 Capital Raised: $405 million (association claim).
• Ecosystem Company Change: A 7.5% decline in the number of active companies, which the report frames as a sign of “infrastructure-led” maturity and consolidation (association claim).

While the industry frames the decline in companies as consolidation, it also highlights the risk of businesses leaving for more crypto-friendly jurisdictions. This advocacy effort aligns with a global trend where nations are competing to attract Web3 innovation through comprehensive legal frameworks, such as the European Union’s Markets in Crypto-Assets (MiCA) regulation. The push for reform directly engages with the historically cautious stance of Israeli financial regulators, including the Bank of Israel, which has prioritized risk management and financial stability in its approach to digital currencies.

The next steps for the Israeli Crypto Companies Association involve direct engagement with policymakers to turn their proposals into law. The success of this lobbying effort will be a critical factor in determining whether Israel can retain its existing crypto companies and attract new investment. The key issue to watch is whether regulators will relax rules on tokenization and other core Web3 activities, or maintain their current risk-averse posture.