Israeli Regulators Approve Shekel Stablecoin in Notable Regulatory Signal

Israel’s Capital Market, Insurance and Savings Authority (CMISA) has granted full regulatory approval to BILS, a shekel-pegged stablecoin developed by Bits of Gold – Israel’s licensed crypto broker and custodian – following a two-year pilot conducted on the Solana blockchain under the regulator’s sandbox framework, marking the conclusion of a process that began formally with the Bank of Israel’s 2023 discussion paper on stablecoin principles.

This is not simply the launch of a domestically useful payment token. It is evidence of a deliberate structural pattern – jurisdictions with mature financial regulators are now moving to anchor stablecoin issuance to local-currency rails, establishing compliant alternatives to dollar-denominated tokens before the network effects of USD-pegged instruments become structurally irreversible.

Source: ICM

We suspect the timing of CMISA’s approval is not incidental. With the global stablecoin market capitalization exceeding $320 billion at the time of approval – overwhelmingly concentrated in USDT and USDC – regulators in smaller reserve-currency jurisdictions face a narrowing window in which to establish local-currency stablecoin infrastructure before dollar-denominated settlement becomes the de facto standard for on-chain commerce. Israel’s approval is, in that sense, a calibrated preemptive move as much as it is a domestic fintech milestone.

BILS and CMISA: How the Shekel-Pegged Stablecoin Approval Actually Functions

The mechanism functions as follows: Bits of Gold developed BILS under CMISA’s regulatory sandbox beginning in March 2024, operating the token on the Solana blockchain throughout the pilot period in close coordination with the Israel Tax Authority and the Finance Ministry.

The two-year supervised pilot was explicitly designed to test reserve management, custody arrangements, and on-chain operational compliance before any public issuance at scale.

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Under the terms CMISA established, BILS reserves must be held in segregated accounts at Israeli banks – foreign custody is excluded – a requirement that operationally ensures the regulator retains direct audit access and supervision over the fiat backing at all times.

The Bank of Israel’s 2023 discussion paper, which laid out non-binding principles distinguishing fiat-backed stablecoins from algorithmic instruments, had specifically recommended that CMISA serve as the initial licensing authority for shekel-pegged issuers, with potential transfer of oversight to the Bank of Israel itself should BILS achieve the scale of a systemically important payment system under rules analogous to Israel’s Payment Services Law.

Youval Rouach, founder and CEO of Bits of Gold, described BILS as “a direct bridge between the Israeli shekel and the global digital assets economy, enabling real-time payments, on-chain trading, and programmable financial applications based on a regulated local currency.”

The stated use cases – instant payments, shekel-denominated on-chain trading, and programmable financial applications- are structurally consistent with the design objectives CMISA prioritized throughout the sandbox period, and the local-reserve mandate materially constrains the systemic risks that have historically attached to offshore-custodied stablecoin reserves.