Israel draft brings digital investment assets under the ISA
Israel's draft would licence trading in digital investment assets outside the securities test, and narrow clearing and custody to ISA-supervised venues.
The Israeli Ministry of Finance has put a licensing gateway, rather than a new securities label, around digital investment assets. On November 1, 2026 it published a memorandum that would bring trading platforms in those assets under the Israel Securities Authority (ISA), including assets that fall outside the securities test in section 1 of the Securities Law, 5728-1968. A public multilateral venue would need an exchange licence, and clearing or custody would need a clearing licence only when the system serves an exchange or a clearing house the Authority supervises.
The draft stays open for comment until 19:35 on November 22, 2026, and would amend the Securities Law, the Joint Investment Trust Law, 5754-1994, the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 5755-1995, and the Prohibition on Money Laundering Law, 5760-2000. A digital asset is a digital representation of value or of a right that can be transferred and stored digitally by distributed ledger technology or similar technology. A digital investment asset is a digital asset used for financial investment, whether that purpose stands alone or sits beside another use. The explanatory notes align that wording with legislation elsewhere, including the European Union Markets in Crypto-Assets (MiCA) regime.
What sits outside the definition
Four categories would stand outside the digital investment asset definition: a unique non-fungible asset whose further identical or similar units are unavailable to buy or sell; a digital asset built to hold a stable value against legal tender or foreign currency and used for payment; a central-bank representation of legal tender or foreign currency; and any further asset the Minister of Finance prescribes on the Authority's proposal or in consultation with it. The notes add a hard limit: those exclusions bind that definition alone and do not apply where the asset meets the legal tests for a security. Payment stablecoins are left with the Capital Market, Insurance and Savings Authority under the June 2026 memorandum, and a central-bank digital currency stays with the Bank of Israel. The same boundary is under consultation in a Canada Gazette draft on non-bank stablecoin issuers and in FCA CP26/36.
The notes, in translation:
"The purpose of the proposed regulation is to address the risks that accompany investment in the digital assets, alongside preservation of their potential advantages, while maintaining technological neutrality…"
Supervision of exchange platforms trading digital investment assets, including assets outside the section 1 securities definition, would sit with the Authority and require its licence. Clearing, and custody for an exchange or a clearing house, would follow on a limb the notes call relatively narrow: because custody already sits under the Financial Services Supervision Law, the clearing-house rules would reach a system that clears and holds these assets on its own only where it serves an Authority-supervised exchange or clearing house. Nodes, miners and validators of the ledger would remain outside that definition. Spot conversion of the assets would stay under the regulated financial-services law.
The transition for firms already live
Commencement would fall one year after publication. A firm that, on the eve of commencement, runs a trading or clearing system in these assets alone, and that holds a financial-asset service licence or is a veteran provider, may continue if it notifies the Authority, files for an exchange or clearing licence within six months, and receives an acknowledgement, until the Authority decides. Advice and portfolio firms in these assets alone have three months to file, and an individual may continue for two years after a notice within three months. The notes say foreign firms serving Israeli clients would take an Authority licence under that provision. Gornitzky, in its November 3 note, treats foreign firms as unnamed in the transitional clauses. Goldfarb Gross Seligman and Shibolet describe the same windows.
Under the advice law these assets would become financial assets, so advice and portfolio management would need a licence, and a portfolio manager would need prior written client approval for a trade the notes class as special risk. An exchange serving customers directly, in place of an exchange member, would enter the money-laundering law with the Authority as supervisor. The chairperson could exempt an applicant from many chapter provisions, on conditions. Set beside Deutsche Bank's crypto custody licence, the memorandum would catch custody done for an Authority-supervised venue. The Authority would also set prospectus, reporting and direct-to-customer rules, including safeguarding and cyber security. The comment window will test where "for the purpose of financial investment" stops, and whether a foreign venue lacking an Israeli financial-asset licence has a transitional runway in the operative clause.
This article is informational analysis only and is not financial, investment, or trading advice. Cryptocurrencies are highly volatile and can lose substantial value rapidly. Past performance and historical patterns do not guarantee future results. Do your own research and consult a regulated financial adviser before making any investment decision.
Reporting by Karthik Subramanian. Filed 8 November 2026, 09:23 GMT.
Digital Assets Correspondent
Karthik Subramanian is a founder, writer, and technology consultant with nine years in the crypto ecosystem.
