Financial Regulation Updates- September 2026

Dear Clients and Friends,

We are pleased to present our September 2026 Client Update on Financial Regulation in Israel, featuring a summary of key regulatory developments relevant to the activities of various financial service providers operating in the Israeli market.

SEC Proposes to Modernize Rules for Transfer Agents, Allowing Shareholder Registers to Be Kept on Blockchain (September 1, 2026).

In the U.S., public companies keep their official shareholder register through a “transfer agent” – a company registered with the Securities and Exchange Commission (SEC) that records who holds the company’s shares and processes transfers between holders. The rules governing transfer agents date back to the late 1970s and 1980s, when shares were held mainly in the form of paper certificates, and the SEC has now proposed to overhaul them.

The most significant change is that the official shareholder register could be kept on a blockchain, provided that the transfer agent retains exclusive control over it.

In effect, this creates the legal basis for recording ownership of “tokenized” shares (shares represented by digital tokens) directly on-chain.

Comments may be submitted until November 3, 2026.

For more Information click here.

SEC Allows Trading of Tokenized U.S. Shares on Blockchain-Based Platforms under a Temporary “Innovation Exemption” (September 17, 2026).

Under U.S. law, a platform that brings together buyers and sellers of shares would generally have to register as a stock exchange. The SEC issued a temporary order – the “Innovation Exemption” – that allows new blockchain-based platforms to offer trading in tokenized versions of U.S.-listed shares and ETFs without registering as an exchange, and exempts the firms that provide liquidity on these platforms from registering as dealers. The exemption took effect immediately and will remain in force for five years, serving as a kind of regulatory sandbox until the SEC adopts permanent rules.

The main conditions are:

the token must give its holder the same rights as the underlying share (such as dividends and voting); “synthetic” tokens that merely track the share price are not covered;
if the token is created by a third party rather than by the company itself, the company must be notified and may object;
each platform may list only a limited number of shares and may handle only a small portion of their trading volume;
the platforms must be U.S. entities, admit only identified, pre-approved participants and stop trading whenever trading in the underlying share is halted.

For more Information click here.

U.S. Federal Reserve Proposes Rules for Banks Issuing Stablecoins (September 24, 2026).

Stablecoins are digital tokens designed to keep a stable value, usually one U.S. dollar. In July 2025, the U.S. enacted the GENIUS Act, the first federal law regulating stablecoins used for payments, and each U.S. financial regulator is now adopting rules for the entities it supervises. The Federal Reserve Board published two proposals for the stablecoin issuers under its supervision, mainly subsidiaries of banks it supervises: one sets out the substantive requirements, and the other sets out the procedure for obtaining approval to issue stablecoins.

Under the proposal:

every stablecoin must be fully backed, at least one-to-one, by safe and liquid assets held separately, such as cash, bank deposits and short-term U.S. government bonds;
holders must be able to redeem their stablecoins at face value, generally within two business days;
issuers must hold capital against their risks, and an issuer whose capital remains insufficient will be required to sell its reserves and redeem all of its stablecoins;
issuers may not pay interest or any other return to holders simply for holding the stablecoin.

Comments may be submitted until November 30, 2026.

For more Information click here.

SEC Proposes to Open Private Market Investments to a Broader Range of Investors (September 30, 2026).

In the U.S., investments in private markets (such as private equity, private credit and venture capital funds) are generally available only to “accredited investors” – mainly individuals who meet income or net-worth thresholds, a concept similar to the “qualified investors” listed in the First Addendum to the Israeli Securities Law. The SEC published a package of proposals intended to give a broader range of investors access to these markets while maintaining investor protection.

Under the proposals:

individuals could qualify as accredited investors based on their professional knowledge rather than only their wealth, for example by passing a dedicated exam or holding recognized professional credentials (such as CPA, CFA or CFP);
investment managers could charge performance fees to a wider range of clients, including funds offered to the public, subject to a cap of 20% of the gains;
the rules for “interval funds” – publicly offered funds that invest in less liquid assets and allow investors to redeem their units only periodically – would be relaxed, and such funds, as well as other closed-end funds, could offer several classes of units.

Comments may be submitted until December 4, 2026.

For more Information click here.

UK: FCA Clarifies the Scope of the New Crypto Licensing Regime and Opens Applications (September 16 and 30, 2026).

The UK is introducing a full licensing regime for crypto activities, which will take effect on October 25, 2027. Until then, crypto firms are only required to register with the Financial Conduct Authority (FCA) for anti-money laundering purposes. On September 16, 2026, the FCA published final guidance explaining which activities will require a license under the new regime: issuing stablecoins in the UK, operating a crypto trading platform, buying and selling crypto for clients or arranging such transactions, holding crypto on behalf of clients (custody) and arranging staking.

On September 30, 2026, the FCA began accepting license applications. Any firm that wishes to continue its crypto activity in the UK after the new regime takes effect must apply by February 28, 2027. This also applies to firms already registered with the FCA for anti-money laundering purposes, as their registration will not be converted into a license automatically.

What happens on October 25, 2027 depends on whether the firm applied on time:

a firm that applied by the deadline but has not yet received a decision may continue operating as usual until the FCA decides;
a firm that applied late or was refused may only service its existing contracts, for up to two years, and may not take on new business;
a firm that did not apply must wind down its UK activity before the regime takes effect.

For more Information click here and here.

Cyprus: Investment Firms May No Longer Keep the Interest Earned on Client Money (September 29, 2026).

Investment firms that hold client money (for example, online brokers) deposit it with banks, and some firms have kept the interest earned on these deposits for themselves. In September 2026, the European Commission clarified, in an answer published by the EU securities regulator ESMA, that this is not permitted: the prohibition under EU rules (MiFID II) on an investment firm using client money for its own benefit also covers the interest earned on that money.

Following this clarification, the Cyprus Securities and Exchange Commission (CySEC), which supervises many brokers operating across Europe, instructed Cyprus investment firms to review their arrangements without delay and revoked its 2009 circular on the subject. Firms must be able to show that their arrangements have been assessed and documented and that clients’ interests were taken into account; senior management, compliance officers and auditors must oversee the implementation, and CySEC may require firms to demonstrate compliance. Since the clarification concerns EU-wide rules, it is relevant to investment firms throughout the EU.

For more Information click here.

Singapore: MAS Proposes to Anchor its Stablecoin Regime in Law (September 1, 2026).

The Monetary Authority of Singapore (MAS), Singapore’s central bank and financial regulator, published for consultation draft amendments to the Payment Services Act that will give legal force to its stablecoin framework, first announced in 2023. The framework covers stablecoins pegged to a single currency (the Singapore dollar or another major currency) and requires issuers to hold reserves backing the full value of their stablecoins, maintain minimum capital, redeem stablecoins at face value and provide proper disclosure. Only licensed issuers will be able to call their tokens “MAS-regulated stablecoins”; other stablecoins will be treated like any other cryptocurrency.

MAS also proposes to:

prohibit issuers from paying interest to stablecoin holders;
allow stablecoins issued jointly by a Singapore issuer and a foreign issuer, and recognize a limited number of foreign stablecoins regulated under a comparable regime abroad, for cross-border use between financial institutions;
require issuers to conduct stress tests and prepare plans for recovery and orderly wind-down.

The consultation closed on October 16, 2026.

For more Information click here.

FATF: Hawala and Underground Banking Are a Key Channel for Professional Money Launderers (September 3, 2026).

The Financial Action Task Force (FATF), the international body that sets global anti-money laundering standards and of which Israel is a member, published a report on “underground banking” and hawala – informal money transfer systems in which value is moved between countries through a network of brokers who settle accounts among themselves, without the money passing through the banking system.

According to the report, which is based on input from more than 50 countries, over 80% of them see these systems as one of the main channels used by professional money launderers, who launder money for others in exchange for a fee; some of the cases examined involved more than EUR 500 million within a few months. A growing trend is “digital hawala”, in which brokers coordinate through encrypted messaging apps and settle through mobile wallets, instant payments and stablecoins.

For more Information click here.