Israel's Largest Bank, Bank Leumi, to Launch Crypto Trading via Galaxy Partnership

Bank Leumi, Israel's largest bank, has taken a significant step into the digital asset market by forming a strategic partnership with Galaxy Digital to offer its customers direct trading services for Bitcoin (BTC), Ether (ETH), and Solana (SOL). Expected to launch in early 2027, this service will position Bank Leumi as the first bank in Israel to provide direct cryptocurrency trading. Customers will be able to easily access these digital assets through the bank's investment application, Leumi Trade, and its mobile banking arm, Pepper.

This move by the bank is considered a strategic step driven by the belief that digital assets are becoming an integral part of the global financial system. Under this partnership, Galaxy Digital will provide the trading and related services infrastructure to Bank Leumi through its GalaxyOne Institutional platform. Furthermore, Galaxy's Custody Infrastructure platform, formerly known as GK8, will support the bank's digital asset custody needs. Maya Ravia, Head of Strategy at Bank Leumi, stated that this initiative represents a significant pillar of the bank's innovation strategy, providing customers with secure and regulated access. Lior Lamesh, CEO of Galaxy Israel, emphasized the rapidly growing digital asset market in Israel and their role in providing a trusted foundation for institutions.

This is not Bank Leumi's first foray into the digital asset market. The bank had previously launched a similar project with Paxos in 2022, but this initiative was shelved due to the Bank of Israel's lack of approval. The timing of the current partnership is not coincidental; Israeli regulators revised digital asset rules in the summer of 2026, paving the way for such projects. The new service will offer a significant convenience for retail investors, as the bank will also manage tax compliance on behalf of its customers. In Israel, cryptocurrency gains are subject to a 25% capital gains tax, with an additional 3% surtax for high earners. This feature eliminates a major friction point for individual investors.

Bank Leumi's move highlights the increasing institutional interest and adoption of digital assets within the Israeli financial sector. This development could encourage other financial institutions in the country to offer similar services. Globally, many major banks are also expanding their digital asset offerings. For instance, Deutsche Bank aims for crypto custody services in collaboration with Bitpanda and Taurus, while Germany's Sparkassen network plans retail crypto trading through DekaBank. Standard Chartered obtaining a MiCA license and institutions like Citi, HSBC, and BNY Mellon expanding custody and tokenization services reflect this trend on a global scale.

The integration of digital assets into the mainstream financial system is directly linked to developments in global regulations. Regulatory clarity, such as Europe's Markets in Crypto-Assets (MiCA) framework, enables banks to take more secure steps in the digital asset space. The regulatory reforms in Israel are also part of this global trend. Such initiatives accelerate the adaptation of the traditional banking system to digitalization while offering investors access to new investment tools in a safer and regulated environment. The perception of digital assets as a "safe haven," especially during periods of geopolitical uncertainty, could further increase adoption rates in countries like Israel.

Analysts suggest that Bank Leumi's pioneering step will further expand the digital asset market in Israel and potentially transform the country into a regional crypto innovation hub. The shift of banks towards digital asset services can boost liquidity and institutional participation in the sector, contributing to overall market stability. For infrastructure providers like Galaxy Digital (GLXY), such partnerships are crucial for diversifying revenue streams and expanding market share. In the short term, the launch of the service in early 2027 and the anticipated demand from Bank Leumi customers could significantly impact cryptocurrency trading volumes in Israel.