Israel plans stricter supervision of stablecoins and is moving ahead with a digital shekel roadmap to secure its payments infrastructure while adapting to fast-growing private crypto use.
Summary
- The Bank of Israel notes a stablecoin market of more than $300 billion and monthly volumes of $2 trillion, warning that dependence on Tether and Circle poses systemic risks.
- Officials want 1:1, highly liquid reserves and stricter regulation as stablecoins become embedded in trading, remittances and everyday payments.
- The Digital Shekel project focuses on broad public use, with a roadmap for 2026 and recommendations by the end of 2024 to keep the state at the center of payment innovation.
Israel is moving toward stricter regulation of stablecoins as the Bank of Israel incorporates them into the country’s future payments infrastructure, according to statements made at a recent financial conference.
The Bank of Israel is reassessing the role of private digital currencies in daily financial transactions as stablecoin adoption expands beyond cryptocurrency trading circles, officials said.
Israel continues to make progress on stablecoin legislation
Bank of Israel Governor Amir Yaron outlined plans for stricter regulatory requirements at the Payments in the Evolving Era conference in Tel Aviv, stating that oversight will intensify as stablecoin use continues to grow.
The Bank of Israel reported that global adoption of stablecoins has reached significant proportions, with the sector surpassing a market capitalization of $300 billion and monthly transaction volumes exceeding $2 trillion. According to Coin BureauOfficials noted that these figures put stablecoins at a level comparable to the balance sheets of mid-sized international commercial banks.
The growth has been driven by the use of stablecoins in trading, cross-border transfers and demand for digital instruments that avoid the price volatility associated with other cryptocurrencies, according to presentations at the conference.
About 99% of stablecoin market activity is concentrated among two issuers, Tether and Circle, according to data presented at the conference. Israeli policymakers argued that this concentration creates systemic vulnerability and warned that disruptions at the issuer level could impact global payment channels.
Officials emphasized the need for strict reserve practices, including fully funded 1:1 reserves and liquid assets capable of handling sudden redemption demands, according to statements made at the event.
The Bank of Israel has also advanced its central bank digital currency initiative. Yoav Soffer, who heads the digital shekel project, described the planned currency as central bank money designed for widespread use and released a 2026 roadmap detailing the stages of development. Official recommendations are expected by the end of 2024, according to the announcement.
The accelerated timeline reflects recent steps by the European Central Bank, according to industry analysts. The faster schedule reflects central banks’ responses to competition from private digital currencies and rapid changes in the payments sector, observers said.
Market participants have linked the timing to a broader global trend of central banks modernizing digital money strategies. The digital sheqel project represents a strategic effort to maintain control of the national payments infrastructure while supporting innovation within regulated frameworks, according to industry commentary.
