Israel Approves Shekel-Backed Stablecoin in Major Crypto Regulatory Move

Key Points

• Israel’s CMISA grants full approval to shekel-pegged stablecoin BILS after two-year regulatory sandbox pilot.
• Move reflects effort to establish local-currency stablecoin infrastructure amid growing USD-denominated market dominance.

Israel’s Capital Market, Insurance and Savings Authority (CMISA) has approved BILS, a shekel-pegged stablecoin issued by Bits of Gold, a licensed Israeli crypto broker and custodian.

The approval follows a two-year pilot conducted on the Solana blockchain under the regulator’s sandbox framework, a process that formally began after the Bank of Israel’s 2023 discussion on stablecoin principles.

The decision signals a broader regulatory pattern in which jurisdictions with established financial oversight frameworks are supporting local-currency stablecoins.

Authorities in smaller reserve-currency economies are moving to create compliant domestic alternatives before dollar-pegged stablecoins become dominant in on-chain settlements.

At the time of approval, the global stablecoin market exceeded $320 billion in capitalization, largely concentrated in dollar-denominated tokens such as USDT and USDC.

Regulatory Structure and Sandbox Oversight

Bits of Gold began developing BILS within CMISA’s regulatory sandbox in March 2024, operating the token on the Solana blockchain during the supervised testing period.

The pilot involved coordination with the Israel Tax Authority and the Finance Ministry and focused on reserve management, custody controls, and operational compliance.

Throughout the trial, regulators evaluated safeguards before permitting a broader public rollout.

Under CMISA’s framework, BILS reserves must be held in segregated accounts at Israeli banks, excluding foreign custody arrangements.

This structure ensures ongoing supervisory access and direct audit oversight of the fiat reserves backing the token.

The Bank of Israel’s 2023 paper distinguished fiat-backed stablecoins from algorithmic models and recommended CMISA as the initial licensing authority for shekel-based issuers.

If BILS grows to the scale of a systemically important payment system, oversight could shift to the Bank of Israel under provisions similar to Israel’s Payment Services Law.

Bits of Gold CEO Youval Rouach described BILS as a bridge between the Israeli shekel and the digital asset economy, supporting real-time payments and programmable financial applications.

The proposed use cases include shekel-denominated on-chain trading and instant payments within regulated financial infrastructure.