Israel Fast-Tracks Digital Shekel and Tightens Stablecoin Rules

Israel is advancing its digital shekel project and tightening stablecoin oversight, requiring strict reserves and transparency as stablecoins become systemically important. The digital shekel aims for a 2026 launch.

Israel is accelerating its digital shekel project, targeting a 2026 rollout, while significantly tightening oversight of stablecoins due to their growing systemic importance. The Bank of Israel and other authorities highlight that stablecoins now exceed $300 billion in market capitalization and $2 trillion in monthly transactions, rivaling mid-sized global banks. Officials stress that 99% of stablecoin activity is dominated by Tether and Circle, raising concentration and systemic risk concerns. New regulatory priorities include strict 1:1 reserve backing, high liquidity, transparent reporting, and robust compliance frameworks. The digital shekel is envisioned as secure, central bank money accessible to all, aiming to modernize payments, foster competition, and reduce reliance on foreign stablecoins. Technical development focuses on interoperability, cybersecurity, and privacy, with comprehensive guidelines for stablecoin issuers covering licensing, capital reserves, operational resilience, and consumer protection. These measures are designed to mitigate risks, support innovation, and attract institutional investment, while addressing challenges such as scalability and regulatory harmonization. Official recommendations for the digital shekel are expected by the end of 2024.