What is actually being offered

An offer to buy a “real estate token” today usually takes one of two structures. In the first, the token is presented as representing the property itself, or a part of it: the buyer receives a digital entry which, on the marketing description, reflects a direct holding in a flat, a plot or a building, and its transfer is described as a transfer of that holding. In the second, the property is held by a legal entity, a company or a partnership, and the token represents a unit in that entity: what passes is a participation unit or a share in the corporation holding the property, and the holder’s right against the property itself is indirect, depending on the entity’s constitutional documents and on its solvency.

The two look alike on the buyer’s screen and are often described with the same word. Their legal analysis is completely different. The first is examined under land law and its requirements of form and registration. The second is examined under company law, securities law and the tax chapter dealing with a real estate association. The first question to ask of any such offer is therefore not what the marketing material says, but which structure is involved, and precisely what legal instrument stands behind the digital entry.

Ownership of land passes on registration

Section 6 of the Land Law, 5729-1969, provides: “A transaction in land is the conferring of ownership, or of another right in land, at the will of the person conferring it, save for inheritance under a will.”

Section 7(a) provides: “A transaction in land requires registration; the transaction is completed on registration, and the time at which the registrar approved the transaction for registration is treated as the time of registration.” Section 7(b) adds: “A transaction that has not been completed by registration is treated as an undertaking to carry out a transaction.” Section 8 sets out the requirement of form: “An undertaking to carry out a transaction in land requires a document in writing.”

The practical consequence follows. A blockchain is not the land registry, and an entry on it is not a registration with the Registrar of Land. Transferring a token between digital wallets does not transfer ownership of Israeli land, and it cannot complete a transaction in land. If the documents behind the token do confer a right in land within the meaning of section 6, then until the transaction is registered it is treated, under section 7(b), as an undertaking to carry out a transaction, and that undertaking itself requires a document in writing under section 8. In most of the structures on offer the token confers no right in land at all, only a contractual right against the issuer, so section 7 is never engaged. In either case, where the issuer is neither the registered owner nor the holder of the right, the holder has no practical means of completing registration and is left with a contractual claim alone.

The point should be stated plainly. The marketing claim that “the token is the asset”, or that ownership passes together with the token, is wrong in law so far as Israeli land is concerned. A contractual mechanism can be built in which the token evidences a right or serves as the means of transferring a contractual right, but the transfer of ownership itself depends, as in any land transaction, on an unbroken chain of title, on production of the required clearances and on registration actually being effected.

The second structure: the asset sits in an entity and the units are sold

The second structure is designed to sidestep the registration requirement. The property remains registered in the name of a single entity and investors buy units in that entity. The Land Taxation (Appreciation and Acquisition) Law, 5723-1963, was drafted for precisely this scenario. Section 1 defines a real estate association (איגוד מקרקעין) as “an association all of whose assets, directly or indirectly, are rights in land”, excluding an association listed for trading on the stock exchange and a real estate investment fund as defined in the Income Tax Ordinance. The same section defines an action in an association as “the granting of a right in an association, its endorsement, transfer or waiver, and a change in the rights deriving from a right in an association, whether for consideration or without, but excluding an allocation”.

Here is a point the marketing material almost always misses. The general definition in section 1 excludes an allocation from the scope of an action in an association, from which it is easy to infer, wrongly, that issuing new units to investors is not a taxable event. For the purposes of purchase tax the Law lays down a definition of its own, and a wider one. Section 9(b)(1) provides that “on an action in a real estate association the purchaser shall be liable to the purchase tax that would have been payable on a sale of a right in land whose value is the proportionate part, as stated in paragraph (1a), of the value of all the rights in land owned by the association”, and that for the purposes of that subsection an action in an association means “the granting of a right in an association, including its allocation, endorsement, transfer or waiver”, an allocation being “any issue of rights in the association”. Section 9(b)(1a) adds that “the proportionate part referred to in paragraph (1) is the ratio between the rights sold in the real estate association and the totality of the rights in that association”. The two limbs must be kept apart. For purchase tax the definition in section 9(b)(1) applies, and it includes an allocation expressly. For appreciation tax the general definition in section 1 applies, from which an allocation is excluded, so an issue of new units does not of itself give rise to appreciation tax, whereas a transfer of existing units engages both.

The threshold question is whether the entity is a real estate association at all, since the definition requires all of its assets to be rights in land, subject to carve-outs for liquid assets and chattels that are not used to produce income or that are ancillary to the purpose of the association. An entity that also holds subscription monies or a reserve fund may not satisfy the test. Where it does, the very issue of new units to investors is, for purchase tax purposes, an action in a real estate association, and gives rise to purchase tax calculated on the proportionate share of the value of the land. A later sale of those units on the secondary market falls within the same concept. The Tax Authority states this expressly in its 2019 guide for sellers and purchasers of a right in land: “appreciation tax is imposed on a person selling a right in land and on a person carrying out an action in a real estate association, while purchase tax is imposed on the purchaser.” It even maintains a dedicated declaration form for such an action, form 7002, the seller’s declaration (self-assessment) on an action in a real estate association. The route that tokenization schemes present as an innovation has been regulated by Israeli land taxation law for decades, and it carries reporting duties and a tax charge.

Is the token a security

Section 1 of the Securities Law, 5728-1968, defines securities as “certificates issued in series by a company, a cooperative society or any other corporation, conferring a right of membership or participation in them or a claim against them, and certificates conferring a right to acquire securities”, whether registered or bearer, excluding securities issued by the Government or by the Bank of Israel which satisfy one of the two conditions set out in the definition.

The committee appointed by the Israel Securities Authority to examine the regulation of public issues of decentralised cryptographic coins, chaired by the Authority’s chief economist, set out a short interpretative rule in the recommendations of its final report of March 2019: “the application of securities law is not technology dependent.” The committee’s interim report put the matter still more directly: cryptographic coins conferring rights similar to those of traditional securities such as a share, a debenture or a participation unit “will be treated as a security”, and “the question whether a coin is a security will be decided on the whole of the circumstances and characteristics of each case, in the light of the purposes of the Law.” The report is a set of recommendations; it is not legislation or subordinate legislation.

The practical consequence lies in section 15(a): “A person shall not make an offer to the public save under a prospectus whose publication the Authority has permitted, or under a draft prospectus approved and signed as provided in section 22 and filed with the Authority.” Section 15(b) adds: “A person shall not make a sale to the public save under a prospectus whose publication the Authority has permitted.” Section 15A lists actions that do not constitute an offer or a sale to the public, among them an offer or sale to investors whose number does not exceed a number prescribed by regulations. A token that confers on its holder an economic right in an asset, in its fruits or in the proceeds of its realisation, and that is offered to the general public, is likely to be treated as an offer to the public of a security. The determination is made on the whole of the circumstances of the particular case, so no blanket classification either way can be relied on. Such an offer, without a prospectus and without an exemption, is prohibited by section 15.

The Israel Securities Authority has published a revised proposal to amend the application of securities law to digital assets, containing a proposed definition of a digital asset as “a digital representation of value or of a right, transferable and storable electronically by means of distributed ledger technology”, and a test under which a digital asset used “for the purpose of financial investment” falls within the Law. As at September 2026 no evidence was found that the proposal has been enacted. The question whether a particular token is a security is therefore decided today under the existing law and by substantive tests, without an express statutory definition.

Taxation

Income Tax Circular 5/2018 deals with the taxation of activity in a decentralised means of payment. The circular provides that a decentralised means of payment used as a medium of exchange “is not a currency or foreign currency”, and that it “constitutes the property of the person holding it” and falls within the definition of an asset. It follows that every realisation is a taxable event: on the capital account, capital gains tax under section 91 of the Income Tax Ordinance, and on the revenue account, where the activity amounts to a business, tax under section 121 for an individual or section 126 for a company. For value added tax purposes, a person whose activity amounts to a business is required to register as a financial institution under section 4 of the Value Added Tax Law.

Income Tax Circular 7/2018, dated 13 March 2018, deals with the issue of digital tokens for the provision of services or products under development. Its scope is confined to utility tokens, that is, tokens issued by a single central body representing an undertaking by the issuer to supply a future service or product. The circular expressly excludes from its scope security tokens representing financial rights or equity-like rights, and decentralised tokens not issued by a central body. It also states that it addresses tax aspects only and does not establish the regulatory framework, and that every issue remains separately subject to the Israel Securities Authority, the Bank of Israel and the other regulators.

On the status of these rules the State Comptroller observed, in a report of November 2024, that the Tax Authority began publishing taxation rules for digital coins at the end of 2017, that “the taxation rules were not laid down in primary legislation and were published in various ways”, and that “none of the taxation rules laid down between 2017 and 2023 was anchored in legislation, and accordingly in certain cases there is no certainty that the rules bind taxpayers”. The result: there is no Israeli tax circular for a real estate token. A person acquiring such a token operates at the intersection of land taxation law, the Income Tax Ordinance and circulars written for a different kind of token, without dedicated guidance and without an anchor in primary legislation.

Licensing

A person operating a platform in Israel for the sale, holding, exchange or custody of tokens will generally require a licence to provide a service in a financial asset from the Capital Market, Insurance and Savings Authority under the Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016, and is subject to identification, reporting and record-keeping duties under the Prohibition on Money Laundering Order applying to providers of a service in a financial asset, of 2018. That is the position taken by the Authority in its 2026 regulatory plan, which treats a virtual currency as a financial asset. Providing a service in a financial asset without a licence is prohibited by the Law. The plan, published on 31 December 2025, includes an item on rules for the safekeeping of a financial asset of the virtual currency type and an additional capital requirement.

The regulated sector is small. The State Comptroller recorded in the November 2024 report that “five licence holders currently operate in Israel in the field of virtual assets, under licences granted to them by the Capital Market Authority”. On the banking side, the Bank of Israel addresses the subject in Proper Conduct of Banking Business Directive 411, on the management of money laundering and terrorist financing risks, section 26 of which deals with payment services incidental to customers’ activity in virtual currency. The directive was amended by Circular no. 06-2843 of 30 April 2026.

What the state has actually done

Israel has no bespoke statute regulating tokenization or digital assets. Everything in the field rests either on existing general legislation or on a memorandum or proposal that has not been enacted.

The only legislative step that has advanced is the memorandum of the Supervision of Financial Services (Issue of Stable Digital Coins) Law, 5786-2026, published for public comment on 29 June 2026 by the Ministry of Finance and the Capital Market Authority. As at September 2026 it remains a memorandum, it has not passed through the legislative process, and it does not deal with real estate tokenization at all.

Government decision 204 of February 2024 required draft legislation in the field to be submitted within 180 days. That deadline was not met.

The Bank of Israel published a principles document on the activity of stable digital coins in Israel, prepared by a team headed by the Deputy Governor and last updated in March 2024. It proposes full backing, a licensing requirement and a division of authority between the Capital Market Authority and the Banking Supervision Department, but it says of itself that “this principles document is not to be regarded as binding on the Bank of Israel”.

The digital shekel, the most fully planned public project in the field, remains at the specification and experimentation stage. The Bank of Israel’s own website uses conditional language: if it is issued, the digital shekel “will enable the public to hold and to pay”. No decision to issue has been taken and no timetable for a decision has been published.

The position abroad

In the European Union the markets in crypto-assets regulation, Regulation (EU) 2023/1114, known as MiCA, has applied since 30 December 2024, and, as regards its Titles III and IV, since 30 June 2024. It does not resolve the question of tokenized real world assets either: article 2(4)(a) excludes from its scope “crypto-assets that qualify as financial instruments as defined in Directive 2014/65/EU”, so that digital assets which are financial instruments remain under MiFID II and under the DLT pilot regime, Regulation (EU) 2022/858, which is itself capped by value and issue-size thresholds. In the United Kingdom the Property (Digital Assets etc) Act 2025 received Royal Assent on 2 December 2025, and its single operative section provides that a thing, including a thing that is digital or electronic in nature, is not prevented from being the object of personal property rights merely because it is neither a thing in possession nor a thing in action. The Act therefore establishes only that a digital asset is capable of being the object of a property right, and decides nothing about who owns what, how title passes, or what happens on insolvency.

What the data shows

The Financial Stability Board’s report of 22 October 2024 on the financial stability implications of tokenisation provides the most reliable factual basis currently available. The report states: “The limited publicly available data on tokenisation suggest that its adoption is very low but appears to be growing.”

On systemic risk it states: “Use of tokenisation in the financial sector does not currently pose a material risk to financial stability, mostly due to its small scale.”

On legal risk, which is the observation most directly in point here, it states: “claims that token holders have on issuers or underlying assets may lack legal clarity and may not be legally enforceable in some jurisdictions.” And on real estate expressly: “the tokenisation of non-financial and physical assets, such as real estate or gold, has been considered… but this is not currently widely observed in the market.”

The RealT case illustrates the gap. The City of Detroit announced a major lawsuit against Real Token and 165 related corporate entities over property neglect and nuisance violations. Reports in the trade press also describe the winding up of the venture and the scale of investor losses, but those details were not verified against court documents or any official source and should be read as press reporting only. The fragmented corporate structure, adopted in order to make tokenization possible in the first place, is also the structure that obliges a municipality to litigate against a hundred and sixty-five entities at once.

In Israel no verified real estate tokenization project was found; a search produces only marketing material from platform providers. No supervised venture, regulatory decision or Israeli judgment dealing with real estate tokenization was located. Add to this that publicly available data on the field as a whole is weak, as the FSB itself notes, and that the large figures quoted in marketing material come, for the most part, from commercial research reports or from service providers with an interest in the outcome.

What to establish first

The technology does change real things: it makes record keeping more efficient, it allows participation to be split into small units too expensive to administer by traditional means, and it shortens settlement. It does not change who owns the land, who owes the tax and who is subject to licensing and supervision. Those three questions are decided by the Land Law, the Land Taxation Law and the licensing statutes, and not by the form of ledger in which the token is kept.

Sources: Land Law, 5729-1969, sections 6, 7 and 8; Land Taxation (Appreciation and Acquisition) Law, 5723-1963, section 1 (definitions of a real estate association, an action in an association and a right in land) and sections 9(b)(1) and 9(b)(1a); Securities Law, 5728-1968, sections 1, 15 and 15A; Israel Tax Authority, guide for sellers and purchasers of a right in land, 2019; Israel Tax Authority, form 7002, seller’s declaration (self-assessment) on an action in a real estate association; Income Tax Circular 5/2018 on the taxation of activity in a decentralised means of payment; Income Tax Circular 7/2018 of 13 March 2018 on the issue of digital tokens for services or products under development; Israel Securities Authority, committee on the regulation of public issues of decentralised cryptographic coins, interim report and final report March 2019; Israel Securities Authority, revised proposal to amend the application of securities law to digital assets; State Comptroller, taxation of digital currencies, November 2024; Capital Market, Insurance and Savings Authority, regulatory plan for 2026, 31 December 2025; memorandum of the Supervision of Financial Services (Issue of Stable Digital Coins) Law, 5786-2026, 29 June 2026; government decision 204, February 2024; Bank of Israel, principles for the activity of stable digital coins in Israel, updated March 2024; Bank of Israel, Proper Conduct of Banking Business Directive 411 and Circular no. 06-2843 of 30 April 2026; Bank of Israel, digital shekel pages; Prohibition on Money Laundering (Identification, Reporting and Record-Keeping Obligations of Providers of a Service in a Financial Asset and Providers of Credit Services for the Prevention of Money Laundering and Terrorist Financing) Order, 5778-2018; Financial Stability Board, The Financial Stability Implications of Tokenisation, 22 October 2024; Regulation (EU) 2023/1114 (MiCA); Regulation (EU) 2022/858; Property (Digital Assets etc) Act 2025 (UK); City of Detroit announcements concerning the lawsuit against Real Token.

Questions and answers

Does buying a real estate token give me ownership of an Israeli property?

Ownership of land passes on registration in the land registry. A blockchain is not the land registry, and an entry on it is not a registration with the Registrar of Land. Transferring a token between wallets does not transfer ownership of Israeli land. In most structures on offer the token confers only a contractual right against the issuer.

What are the two structures offered to real estate token buyers?

In the first, the token is presented as representing the property itself or a part of it, and it is examined under land law and its requirements of form and registration. In the second, a company or partnership holds the property and the token represents a unit in that entity, so the right against the property is indirect.

Is purchase tax due when units in a property-holding entity are issued?

For purchase tax the definition in section 9(b)(1) applies, and it includes an allocation expressly. Where the entity is a real estate association, issuing new units to investors gives rise to purchase tax on the proportionate share of the value of the land. A later sale of those units on the secondary market falls within the same concept.

Does issuing new units trigger appreciation tax?

For appreciation tax the general definition in section 1 applies, and an allocation is excluded from it, so an issue of new units does not of itself give rise to appreciation tax. A transfer of existing units engages both limbs. The threshold question is whether the entity is a real estate association at all, since the definition requires all of its assets to be rights in land, subject to carve-outs for liquid assets and for chattels not used to produce income or ancillary to the association’s purpose.

Is a real estate token a security under Israeli law?

A token conferring an economic right in an asset, in its fruits or in its realisation proceeds, offered to the general public, is likely to be treated as an offer to the public of a security. The determination turns on the whole of the circumstances. Such an offer without a prospectus or an exemption is prohibited by section 15 of the Securities Law.

Does a token platform operator in Israel need a licence?

A person operating a platform in Israel for the sale, holding, exchange or custody of tokens will generally require a licence to provide a service in a financial asset from the Capital Market, Insurance and Savings Authority, and is subject to identification, reporting and record-keeping duties under the 2018 Prohibition on Money Laundering Order applying to providers of a service in a financial asset. Providing a service in a financial asset without a licence is prohibited by the Law.

Is there an Israeli law regulating real estate tokenization?

Israel has no bespoke statute regulating tokenization or digital assets, and everything in the field rests on existing general legislation or on a memorandum or proposal not yet enacted. The only legislative step that has advanced is the stable digital coins memorandum published for comment on 29 June 2026, which does not deal with real estate tokenization.

How many real estate tokenization ventures actually operate?

In Israel no verified real estate tokenization project was found, and no supervised venture, regulatory decision or Israeli judgment on the subject was located. The Financial Stability Board report of 22 October 2024 records that adoption is very low but appears to be growing, and that tokenization of real estate is not currently widely observed in the market.

Further reading

Last updated: 8 September 2026

The above is a general overview only and is not legal or tax advice. The law and the regulation in this field change, and every case turns on its own facts.