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Israel's Crypto Blockchain and Web 3.0 Companies Forum launched a lobbying effort last week to push for regulatory reform that it says could add 120 billion shekels ($38.36 billion) to the country's economy by 2035 and create 70,000 new jobs.
At an event in Tel Aviv on February 3, forum leader Nir Hirschman said there is broad public support for legislation that relaxes regulations on statcoins and tokenization, along with easing tax compliance requirements.
Following a US-brokered ceasefire in the Gaza war, 2026 is seen as a “declaration year” for the local digital assets industry, Hirschman Quarterly said.
“The Israeli people are already there and the politicians have to act,” Hirschman-Rubb told Cointelegraph on the sidelines of the Tel Aviv event. “More than 25% of the population already had a crypto transaction in the last five years and more than 20% currently hold digital assets,” he said, citing KPMG research.
Constant growth as the digital asset landscape evolves
According to the October Chinalysis report, the G-20 country's crypto economy has shown continuous growth, with revenues reaching a record high of $713 billion last year. In the year The October 2023 Hamas attacks will reflect a significant increase in crypto volumes supported by strong retail activity, the report said.
Israeli companies such as FireBlocks and Starkware have established leadership positions in the global digital assets landscape and are among the forum's sponsors. According to the NGO Startup Nation Central, more than 160 locally based companies have attracted more than 5% of the $30 billion invested globally in the sector and employ more than 2,500, mainly in the greater Tel Aviv area.
“The problem here is that after a company has revealed that it deals with digital assets, Israeli banks have refused to serve the company, or the company's lawyers have demanded an impossible statement that money from the digital asset will not be deposited in an Israeli bank account,” Hirschman Rube said.
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Among other hurdles the group wants to reform is an income tax provision that penalizes the distribution of tokens to employees as stock options. While traditional stock options offered to employees are taxed at 25%, tokenized options are taxed at 50% for the same value.
National strategy
In July, the country's National Crypto Strategy Committee submitted an interim report to Israel's Knesset for parliamentary review. The committee outlined a strategic framework underpinned by five pillars, including the establishment of a unified regulator, creation of token issuance regulations and banking mergers.
In August, the Israel Tax Authority published a new voluntary disclosure process for taxpayers to disclose previously unreported income and assets, including digital assets, and gain immunity from criminal proceedings. It was the third attempt to implement the agency's official procedure.
However, the agency last month saw taxpayer participation fall short of expectations, but is committed to seeing the initiative through to the end of August 2026.
According to the director of the tax authority, Shei Aharonovitch, “the Israeli banking system is not willing to accept cryptocurrency, and because of selling cryptocurrency, it is very difficult to bring funds.” “There is no doubt that this affects the willingness to make a voluntary declaration, because in the end people want to use the money, not just pay taxes.”
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