Israel Approves Six Bitcoin Mutual Funds, Launching December 31 Amid Crypto Regulatory Shift

The Israel Securities Authority has approved six Bitcoin mutual funds from top investment firms, marking a regulatory breakthrough for Israeli investors. Launching December 31, these funds promise new opportunities.

For the first time, Israeli investors will gain access to Bitcoin-focused mutual funds, as the Israel Securities Authority (ISA) has approved six such funds slated for launch on December 31. The funds, offered by firms like Migdal Capital Markets, More, Ayalon, Phoenix Investment, Meitav, and IBI, represent a significant milestone in Israel’s evolving crypto investment landscape.

Details of the Bitcoin Mutual Funds

All six funds are required to launch simultaneously per ISA conditions, with management fees ranging from 0.25% to 1.5%. Among the offerings, one fund stands out by actively managing its portfolio to outperform Bitcoin’s market performance. Initially, transactions will be restricted to once a day, although future funds may introduce continuous trading options.

Regulatory Breakthrough

This approval marks a turning point after a year of lobbying by investment firms eager to bring Bitcoin-focused financial products to market. An anonymous executive explained:

“Investment houses have been pleading for over a year for ETFs to be approved, submitting prospectuses mid-year. But the regulator had to ensure everything was thoroughly vetted.”

This follows the trend set by the U.S. Securities and Exchange Commission (SEC), which approved spot Bitcoin ETFs last January, resulting in $35.6 billion in inflows and five new Bitcoin all-time highs this year.

Israel’s Crypto Landscape

Israel’s tech-savvy “Start-Up Nation” status extends to its crypto industry, which boasts 174 blockchain-focused companies employing 3,800 people. Despite this innovation, regulatory bottlenecks and banking skepticism have long stymied the market. Many banks refuse to process crypto-derived funds, citing money laundering concerns, creating hurdles for investors trying to comply with tax regulations.

To address these challenges, the Israel Tax Authority introduced a temporary measure allowing taxpayers to report crypto profits through special accounts. This measure, set to expire on December 31, coincides with the mutual funds’ launch, potentially alleviating some issues for crypto investors.

Broader Economic Context

Israel’s economic stability provides a strong backdrop for these developments. The country posted a $4.96 billion current account surplus in Q2 2024, with analysts predicting it could reach $7.8 billion by year’s end. Meanwhile, the Bank of Israel continues to explore a digital shekel, having released an architecture paper and launched a test environment earlier this year.

The approval of Bitcoin mutual funds signals a new chapter for Israel’s crypto market, unlocking opportunities for investors and paving the way for broader financial integration.

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