Israel Approves Six Bitcoin Mutual Funds Set to Roll Out on December 31

This is the first time Israeli investors will have access to Bitcoin-focused mutual funds. The funds, offered by Migdal Capital Markets, More

Israelis will soon have a new way to invest in Bitcoin, with the Israel Securities Authority (ISA) approving six Bitcoin mutual funds that will launch on December 31.

This marks the first time that Israeli investors will have access to Bitcoin-focused mutual funds. The funds will be offered by Migdal Capital Markets, More, Ayalon, Phoenix Investment, Meitav, and IBI, and will all go live at once, as per a condition from regulators.

Management fees for the funds will range from 0.25% to 1.5%, with one fund being actively managed in an attempt to beat Bitcoin’s market performance.

For now, transactions will be limited to once a day, though future funds may allow continuous trading. Several investment firms have been awaiting this moment for over a year, with some submitting prospectuses for Bitcoin funds in mid-2024.

The regulator, however, has been slowly checking the details, an anonymous investment executive told Calcalist. This move comes after the U.S. SEC approved spot Bitcoin ETFs in January, leading to a combined capital inflow of $35.6 billion as Bitcoin's value doubled and set five new all-time highs in 2024.

Israel's crypto industry has been quietly bubbling away for years, with the Start-Up Nation hosting around 174 crypto-focused companies that collectively employ 3,800 people in areas like blockchain development and algorithmic trading.

However, regulatory bottlenecks have hindered the market's growth, with Israeli banks remaining largely skeptical of crypto transactions due to concerns over money laundering and compliance issues.

Many banks even refuse to process funds that are derived from crypto, making it difficult for investors to comply with tax regulations. In January, the Israel Tax Authority (ITA) introduced a temporary measure that allows taxpayers to report crypto profits through special accounts.

This measure has been extended until December 31, but it serves as a short-term solution to a broader problem. In addition to Bitcoin mutual funds, Israel has also ventured into the realm of Central Bank Digital Currencies (CBDCs).

The Bank of Israel has been working on a digital shekel, releasing an architecture paper on the subject earlier this year and launching a test environment in May.

On the economic front, Israel recorded a current account surplus of $4.96 billion in Q2 2024, driven by strong exports and investment inflows. Analysts anticipate the surplus to reach $7.8 billion by the end of the year.