The Israeli Digital Assets Economy: Custody, Zero-Knowledge, Trading, and Regulation

Israel did not build the memecoin economy. It built the plumbing beneath the global digital-assets economy.

Israel’s digital-assets economy was built around custody, cryptography, and settlement infrastructure — not retail speculation. Israeli founders dominate the institutional layer that banks, asset managers, regulated exchanges, and central banks now rely on. They do not dominate the consumer trading layer. They are not the memecoin layer. They are the plumbing.

Fireblocks routes roughly 15 to 20 percent of all on-chain stablecoin volume globally. StarkWare’s zero-knowledge technology has processed more than $1.5 trillion across its rollup systems. eToro — Israel’s largest digital trading platform — completed a $4.2 billion Nasdaq IPO in May 2025. Curv was acquired by PayPal in 2021 for roughly $200 million. Bancor pioneered the automated market maker model before AMMs were a category. The pattern is the same one Israel has executed in AI networking, cybersecurity, and chip design — see The Olam’s NVIDIA Israel coverage and the Israeli AI economy guide for the broader pattern.

This is the complete 2026 guide to the Israeli digital assets economy — the custody layer, the zero-knowledge layer, the trading layer, the regulatory framework, and the cautionary tale that taught the industry what discipline looks like.

The Custody Layer: Fireblocks and the Institutional Standard

If one company explains Israel’s role in crypto, it is Fireblocks.

Founded in Tel Aviv in 2018 by Michael Shaulov, Idan Ofrat, and Pavel Berengoltz, Fireblocks came out of Check Point and Israeli military signals intelligence. The thesis from day one was institutional, not consumer: when banks, asset managers, and exchanges eventually entered crypto, they would need custody infrastructure that met institutional security standards. They built that infrastructure.

Fireblocks raised a $550 million Series E in January 2022 at an $8 billion valuation, led by D1 Capital and Spark Capital with participation from Sequoia, General Atlantic, Index Ventures, SoftBank, and CapitalG. Total funding to date: approximately $1.04 billion across six rounds. The company secured a New York Department of Financial Services (NYDFS) Trust Company charter in August 2024 — qualified-custodian status under one of the strictest financial regulators in the United States.

The scale defines the company. As of late 2025: more than $10 trillion in lifetime assets secured, over 2,400 institutional clients, 550 million wallets, and integrations with more than 150 blockchains. Client list includes BNY Mellon, BNP Paribas, Robinhood, Revolut, Bybit, Galaxy Digital, Bakkt, and FalconX. The Network for Payments product — launched September 2025 — processes more than $200 billion in stablecoin flows monthly across 100+ countries and 60+ currencies.

Two data points define Fireblocks’ market position. First: in July 2025, the platform routed an estimated 15 to 20 percent of all global on-chain stablecoin volume through Network for Payments alone. Second: it was invited as a panelist at the SEC’s custody roundtable in early 2025 alongside Fidelity, Anchorage Digital, and Kraken. Israeli crypto infrastructure now sits at the same regulatory table as the largest US financial institutions.

Fireblocks is to institutional crypto custody what NVIDIA is to AI compute: a category-defining incumbent whose product set became structural infrastructure. The competition — BitGo, Anchorage, Coinbase Custody, Ledger Enterprise — exists. The institutional default consolidated around the Tel Aviv company.

The Zero-Knowledge Layer: StarkWare and Cryptography From the Weizmann

StarkWare, founded in 2018 in Netanya, is the second pillar of Israeli digital assets infrastructure — and the most academically pedigreed crypto company in the world. The founding team: Eli Ben-Sasson (CEO and President), Uri Kolodny (former CEO), Michael Riabzev, and Alessandro Chiesa from UC Berkeley.

Ben-Sasson’s background explains the company. He received his PhD in theoretical computer science from the Hebrew University of Jerusalem in 2001, under Avi Wigderson — one of the founders of computational complexity theory. Postdocs at MIT and Harvard followed, then a faculty position at Technion. In 2014, Ben-Sasson co-founded Zcash, the first major privacy-focused cryptocurrency. In 2018, he co-founded StarkWare with the explicit thesis that zero-knowledge proofs — a cryptographic technique he had been developing for nearly two decades — would become the institutional scaling answer for blockchain systems.

StarkWare’s last reported valuation: $8 billion, from a May 2022 Series D — up from $2 billion six months earlier. The investor base includes Sequoia, Paradigm, and notably Vitalik Buterin personally, who priced the company’s seed round and was its first investor.

The product portfolio:

• StarkEx — a permissioned zero-knowledge rollup deployed in production for dYdX, Immutable, Sorare, and others. More than $1.5 trillion in cumulative transaction volume processed.
• Starknet — a permissionless Layer 2 blockchain on Ethereum, now expanding to Bitcoin as a Layer 2 following the OP_CAT proposal.
• Cairo — StarkWare’s purpose-built programming language for writing zero-knowledge applications.

The lineage matters. The same Israeli academic complex that produced the foundational cryptographic work — Shafi Goldwasser (Turing Award 2012), Adi Shamir (Turing Award 2002, the S in RSA), Avi Wigderson (Turing Award 2023) — also produced Ben-Sasson, StarkWare, and the dominant zero-knowledge cryptography company in the world. No other country has a comparable foundation in modern cryptography. That foundation has now been commercialized.

The Trading Layer: eToro and the Nasdaq IPO

eToro is the most visible Israeli digital assets company because it is now publicly traded — and because its IPO defied the consensus on whether crypto-adjacent businesses could access public markets in 2025.

Founded in 2007 in Bnei Brak by brothers Yoni and Ronen Assia with David Ring, the company started — by Yoni Assia’s own account — on a server in his parents’ garage with $1.5 million in seed funding at a $5 million valuation. The model was social trading: users could copy the portfolios of top-performing traders on the platform. Bitcoin trading was added in 2013. Stocks followed in 2017. The result was a hybrid retail brokerage that grew with the crypto cycle without being exclusively dependent on it.

eToro’s path to public markets took four years and one failed deal. The company announced a $10.4 billion SPAC merger in 2021 that collapsed in 2022 amid SPAC regulatory scrutiny and the broader market downturn. A $250 million secondary raise in 2023 at a reduced $3.5 billion valuation kept the company stable. On May 14, 2025, eToro debuted on the Nasdaq under ticker ETOR at an IPO price of $52 per share — above the planned $46–$50 range. The stock opened at $69.69, closed day one at $67, gave the company a $5.4 billion market cap on day one, and raised $310 million from the offering. IPO valuation: $4.2 billion.

eToro’s Nasdaq listing mattered beyond the valuation. It marked the return of Israeli crypto-adjacent equity to the US public markets after a brutal cycle — the first major Israeli digital-assets IPO since the 2022 market collapse. The transaction reopened a window that had been functionally closed.

The financials supporting the IPO were strong. 2024 revenue: $931 million. 2024 net income: $192 million, a 13x increase over 2023. Crypto trading revenue alone: $12.1 billion in 2024, up from $3.4 billion. The company served 3.5 million funded accounts across 75 countries, with 38 to 40 million total registered users and $17.5 billion in assets under administration.

One generational footnote: Yoni and Ronen Assia’s father, David Assia, co-founded Magic Software — which listed on Nasdaq in 1991, becoming one of the first Israeli companies to do so. Two generations of the Assia family have taken Israeli technology companies public in the US. The continuity is the story.

Why Israel?

The Israeli claim on digital assets infrastructure rests on five conditions, each of which compounds the others.

First, the security pipeline. Fireblocks was founded by Check Point and Israeli military signals-intelligence veterans. Curv came from the same talent base. Hub Security and QEDIT trace to the same pipeline. Crypto custody is, at its core, a security problem — and Israel produces the security engineers at scale. The same pipeline that locked US cloud and AI infrastructure now runs through institutional crypto.

Second, the cryptography lineage. The Israeli academic complex — Weizmann, Hebrew University, Technion — has been at the center of cryptographic theory for forty years. Goldwasser, Shamir, Wigderson, and Ben-Sasson all trace their academic work to this complex. StarkWare commercialized that work. No other country has a comparable academic foundation in modern cryptography.

Third, fintech and trading platform experience. Israel produced eToro, Plus500 (LSE-listed), and a broad bench of retail brokerage and FX platforms. The product knowledge for consumer trading infrastructure exists at scale.

Fourth, hardware-software integration culture. The same engineering culture that makes Israeli teams effective at networking, AI infrastructure, and silicon design also makes them effective at crypto infrastructure — where firmware, hardware-backed key management, and cryptographic primitives all need to work together at production scale.

Fifth, regulatory positioning. Israel’s regulatory framework is more permissive than the EU’s MiCA regime, more restrictive than the UAE’s, and clearer than the US framework was through most of 2023–2024. That mid-range positioning made Israel a viable base for serious crypto infrastructure companies in a way few jurisdictions are.

The Broader Israeli Crypto Bench

Beyond Fireblocks, StarkWare, and eToro, the Israeli crypto bench is broad and historically significant. The pattern holds: Israeli founders sit at the infrastructure layer, not the speculation layer.

Custody and MPC

Beyond Fireblocks, Curv — Tel Aviv, founded 2018, acquired by PayPal in March 2021 for ~$200 million — was one of the earliest institutional MPC custody platforms. The Curv team is now embedded in PayPal’s crypto product organization. Hub Security sits at the intersection of confidential computing and digital asset key management.

Decentralized finance

Bancor — founded in 2017 by Israeli brothers Guy and Galia Benartzi, $153M ICO that year — pioneered the automated market maker (AMM) model that became the foundation of decentralized finance. Uniswap, Curve, and the rest of the DeFi AMM ecosystem trace conceptual origins to Bancor. Orbs operates as Layer 3 execution infrastructure for the broader DeFi stack.

Stablecoin issuance and regulated trading

Bits of Gold — one of four licensed Israeli VASPs — launched BILS in March 2024, the first NIS-pegged stablecoin, built on Solana in partnership with Fireblocks and QEDIT, under CMISA pilot supervision. Bit2C, Hybrid Bridge Holdings, and Horizon (Altshuler Shaham) complete the licensed Israeli VASP roster.

Zero-knowledge and privacy

Beyond StarkWare, QEDIT builds zero-knowledge infrastructure for institutional applications and is the technical partner on the Bits of Gold stablecoin. Beam implemented the Mimblewimble privacy protocol with substantial Israeli development. Kirobo focuses on retrievable transfers and consumer-side key recovery.

Payments and Lightning infrastructure

COTI runs payment-focused infrastructure with privacy-preserving DAG architecture. Lightspark, founded by Israeli-American David Marcus (ex-PayPal, ex-Meta), builds institutional Bitcoin Lightning Network infrastructure. Not headquartered in Israel but founder-Israeli.

The composition tells the same story as the three anchors: Israeli founders dominate the infrastructure layer — custody, ZK, privacy, security, settlement — with thin representation in pure consumer or speculative crypto. That is not coincidence. It is the result of who builds what.

The Regulatory Framework

Israeli crypto regulation has been deliberate rather than dramatic. The framework is multi-agency, technical, and — by design — institutional-friendly.

Cryptocurrency is legal in Israel and classified as a "financial asset" under the Supervision of Financial Services Law. It is not legal tender. It is taxable as a capital asset by the Israel Tax Authority, with capital gains rates ranging from 25 to 33 percent depending on holding period.

Five regulatory bodies share oversight:

• The Capital Market, Insurance, and Savings Authority (CMISA) — licenses Virtual Asset Service Providers (VASPs) under the Financial Services Control Law. The first crypto license was issued in September 2022. Four VASPs are currently licensed: Hybrid Bridge Holdings, Bits of Gold, Horizon (Altshuler Shaham), and Bit2C.
• The Israel Securities Authority (ISA) — has proposed amending the definition of securities to include digital assets used for financial investment. The proposed amendment would affect approximately 150 companies operating in the Israeli crypto space.
• The Bank of Israel (BoI) — running ongoing research on a Digital Shekel central bank digital currency, and modernizing payment regulations to accommodate crypto payment processors.
• The Israel Tax Authority (ITA) — issued a 2024 memorandum recognizing digital assets as capital assets subject to capital gains tax. Began piloting acceptance of tax payments in cryptocurrency in early 2024.
• The Tel Aviv Stock Exchange (TASE) — approved a framework in 2024–2025 allowing TASE members to offer crypto trading and custody services to clients, with mandatory routing through licensed crypto exchanges or custody providers.

The Payment Services Law, enacted in June 2024, modernized the regulatory architecture for digital payment services more broadly. The 2026 tax reform package extends capital gains reporting requirements and adjusts foreign-investor frameworks.

Compared to MiCA, the Israeli framework is more flexible on registration paths. Compared to the US framework prior to 2025, it has been clearer on classification. Compared to UAE VARA, it is more restrictive on licensing but more institutionally aligned. The net effect: a viable jurisdiction for serious infrastructure companies — and an unattractive one for pure-speculation operators.

The Celsius Lesson

Every account of Israeli crypto must address Celsius — not because it is representative, but because its collapse defined what the institutional Israeli crypto community decided it was not.

Celsius Network was founded in 2017 by Alex Mashinsky and S. Daniel Leon. Mashinsky — Ukrainian-born, raised in Israel, then a longtime US technology entrepreneur — built Celsius around a marketing thesis: cryptocurrency holders could earn high yields by lending their assets through Celsius, which would deploy them productively. The slogan was “Unbank Yourself.” The yields were not sustainable.

In July 2022, Celsius filed for bankruptcy with approximately $20 billion in customer deposits at risk. A subsequent Federal Trade Commission investigation produced a $4.7 billion settlement — one of the largest in the FTC’s history. In July 2023, Mashinsky was arrested in Manhattan on seven federal counts. In December 2024, he pleaded guilty to two counts: commodities fraud and a scheme to manipulate the price of CEL, Celsius’s in-house token. Federal prosecutors documented that Mashinsky personally pocketed more than $42 million from selling CEL holdings while publicly promoting the platform.

On May 8, 2025, US District Judge John G. Koeltl of the Southern District of New York sentenced Mashinsky to 12 years in federal prison. US Attorney Jay Clayton’s statement at sentencing: “The case for tokenization and the use of digital assets is strong, but it is not a license to deceive. The rules against fraud still apply.”

Celsius is not the Israeli crypto story. It is the inversion of it. The institutional Israeli crypto community — Fireblocks, StarkWare, Curv, Bits of Gold, and the regulated bench — built on the opposite thesis: serious infrastructure for serious counterparties under serious regulation. The Mashinsky sentencing reinforced what the Israeli regulatory and infrastructure community had been arguing throughout: the institutional path was the only durable path.

What Comes Next

Three structural questions shape the next five years of Israeli digital assets.

First, the stablecoin and RWA tokenization buildout. Fireblocks is positioning aggressively in tokenized real-world assets and stablecoin payment rails. The Israeli regulatory framework — particularly the Bits of Gold BILS pilot and the BoI’s CBDC research — is creating conditions for an institutional Israeli stablecoin ecosystem. If that develops at scale, the country becomes one of the principal jurisdictions for regulated stablecoin issuance globally.

Second, the Bitcoin scaling extension. StarkWare’s expansion of Starknet to Bitcoin as a Layer 2 — pending the OP_CAT proposal — would shift the institutional Bitcoin conversation from pure store-of-value toward programmable settlement. The technology was designed in Netanya.

Third, the next IPOs. eToro proved that Israeli crypto-adjacent companies can clear US public markets. Fireblocks has not announced public market intentions but is structurally ready. The combination of US Trump-administration crypto policy and Israeli regulatory clarity may produce a wave of Israeli crypto-infrastructure IPOs in 2026 and 2027.

Israel’s role in digital assets is no longer theoretical. It is embedded in the custody, cryptography, and transaction rails that global finance increasingly depends on.

The next decade of digital assets may be defined by adoption at the edge — but by infrastructure built in Israel.

Frequently Asked Questions

What is Fireblocks?

Fireblocks is an Israeli institutional digital asset infrastructure company headquartered in Tel Aviv. Founded in 2018 by Michael Shaulov, Idan Ofrat, and Pavel Berengoltz, it provides custody, payments, tokenization, and wallet infrastructure for banks, asset managers, and exchanges. Its last reported valuation is $8 billion (Series E, January 2022). The company has secured more than $10 trillion in lifetime assets, serves more than 2,400 institutional clients including BNY Mellon and BNP Paribas, and holds a New York Department of Financial Services Trust Company charter.

What is StarkWare?

StarkWare is an Israeli cryptography company headquartered in Netanya, founded in 2018 by Eli Ben-Sasson, Uri Kolodny, Michael Riabzev, and Alessandro Chiesa. It develops zero-knowledge proof technology — specifically the STARK protocol — used to scale blockchain systems while preserving security. The company’s products include StarkEx, Starknet, and the Cairo programming language. Last reported valuation: $8 billion (May 2022). More than $1.5 trillion in cumulative transaction volume has been processed across StarkEx systems.

Who founded eToro?

eToro was founded in 2007 in Bnei Brak, Israel, by brothers Yoni Assia (CEO) and Ronen Assia (executive director), with co-founder David Ring. The company went public on Nasdaq in May 2025 under ticker ETOR at an IPO valuation of $4.2 billion. Yoni and Ronen Assia’s father, David Assia, was the co-founder of Magic Software, which listed on Nasdaq in 1991.

What happened to Celsius and Alex Mashinsky?

Celsius Network, a cryptocurrency lending platform founded by Alex Mashinsky and S. Daniel Leon in 2017, filed for bankruptcy in July 2022 with approximately $20 billion in customer deposits at risk. Mashinsky — Ukrainian-born, raised in Israel, and a longtime US entrepreneur — was arrested in July 2023 on seven federal fraud counts. He pleaded guilty to two counts in December 2024 and was sentenced to 12 years in federal prison on May 8, 2025, by US District Judge John G. Koeltl. The Federal Trade Commission reached a $4.7 billion settlement with Celsius — one of the largest in FTC history.

Is cryptocurrency legal in Israel?

Yes. Cryptocurrency is legal in Israel and classified as a “financial asset” under the Supervision of Financial Services Law. It is taxed as a capital asset by the Israel Tax Authority, with capital gains rates ranging from 25 to 33 percent depending on holding period. Virtual Asset Service Providers must be licensed by the Capital Market, Insurance, and Savings Authority (CMISA). The Israel Securities Authority (ISA) is in the process of extending securities regulation to digital assets used for financial investment.

What is BILS?

BILS is the first NIS-pegged (Israeli shekel) stablecoin. Launched in March 2024 by Bits of Gold — one of four licensed Israeli VASPs — in partnership with Fireblocks and QEDIT, BILS runs on the Solana blockchain. The project operates under a Capital Market Authority pilot program within Israel’s regulatory “sandbox” framework. BILS is the first regulated NIS-denominated stablecoin issued by an Israeli licensed entity.

What is a zero-knowledge proof?

A zero-knowledge proof is a cryptographic technique that allows one party (the prover) to prove that a statement is true without revealing any information beyond the validity of the statement itself. In blockchain systems, zero-knowledge proofs are used to scale transaction throughput and to enable privacy-preserving compliance. StarkWare’s STARK protocol is one of the leading production implementations of zero-knowledge proof technology.

Why is Israel important to the global crypto industry?

Israeli founders built and largely control the institutional infrastructure layer of digital assets — custody (Fireblocks, Curv), zero-knowledge cryptography (StarkWare), regulated trading (eToro), and crypto security (Hub Security, QEDIT). The pattern matches Israel’s position in AI networking, cybersecurity, and chip design: institutional infrastructure designed in Israel, used everywhere else. The combination of Unit 8200 security pipeline, Weizmann and Hebrew University cryptography lineage, fintech experience, hardware-software integration culture, and clear regulatory positioning produced the country’s disproportionate concentration of crypto infrastructure companies.

Who regulates cryptocurrency in Israel?

Five Israeli regulatory bodies share oversight: the Capital Market, Insurance, and Savings Authority (CMISA) licenses VASPs; the Israel Securities Authority (ISA) governs digital assets that qualify as securities; the Bank of Israel runs CBDC research and oversees payment systems; the Israel Tax Authority administers capital gains taxation of digital assets; and the Tel Aviv Stock Exchange (TASE) administers the framework allowing its members to offer crypto trading and custody services.