Six Bitcoin Funds to Launch in Israel Following Regulatory Green Light

​Israel is set to welcome its first Bitcoin mutual funds next week, with six funds launching on December 31, 2024, following approval from the Israel Securities Authority. These funds will track Bitcoin's price movements through a range of indexes and strategies, allowing local investors to gain exposure to the cryptocurrency in Israeli shekels.

The newly approved funds will mirror Bitcoin's price trends, with some tracking U.S.-based exchange-traded funds (ETFs) like BlackRock's iShares Bitcoin Trust ETF (IBIT). One of the funds will take an actively managed approach, aiming to outperform Bitcoin's performance. As of December 25, the total market capitalization of all Bitcoin ETFs globally stands at approximately $143.2 billion.

The launch comes after two years of discussions and applications from asset managers in Israel. The funds will be offered by major mutual fund managers, including Phoenix Investment, IBI-Kessem, Meitav, More, Ayalon, and Migdal. Management fees for the funds will range from 0.25% to 1.5%.

This development marks a significant step in Israel's evolving relationship with digital assets, allowing Israeli investors to trade Bitcoin in a regulated environment using the country's fiat currency. Initially, orders will be executed once a day based on Bitcoin's price at that time.

Eyal Haim, vice president of Ayalon Mutual Funds, commented, "For years now, we have been trying to enter the digital currency sector. We launched a mutual fund that focuses on companies in the space, recognizing that their value is tied to fluctuations in digital currencies."

This launch also aligns with Israel's broader digital currency initiatives. The country has been working on developing a central bank digital currency (CBDC), the digital shekel, as part of the Digital Shekel Challenge. This project invites participants to create real-time payment systems using the digital shekel, with the Bank of Israel offering a sandbox environment for testing. The initiative is intended to increase competition among local banks, although privacy concerns related to the CBDC have been raised.

With the introduction of these Bitcoin funds and the digital shekel project, Israel continues to make strides in integrating digital currencies into its financial system, paving the way for more innovation in the sector.