Bank Leumi, Israel’s largest bank serving 2.5 million retail customers, is once again trying its luck in the digital asset space. Through a partnership with Galaxy Digital, customers of Leumi and its digital banking unit, Pepper, are targeted to be able to buy, hold, and sell Bitcoin, Ether, and Solana starting in early 2027.
This service will reside in a dedicated section within the Leumi Trade investment application. If realized, the move will make Leumi the first Israeli bank to offer direct crypto trading access to its retail customers.
On the infrastructure side, Galaxy brings two main components. Trade execution will be handled by GalaxyOne Institutional, a dedicated platform designed for banks and asset managers. Meanwhile, asset custody is entrusted to GK8, an air-gapped wallet provider that is never connected to the internet, which was acquired by Galaxy following the collapse of Celsius.
The Shadow of Failure from Four Years Ago
This is not Leumi’s first attempt to penetrate the crypto market. In March 2022, their Pepper Invest unit had actually announced plans for Bitcoin and Ether trading through a collaboration with Paxos. That plan ultimately fell through because the Bank of Israel failed to give the green light.
Now, Bank Leumi is trying again with a different partner. Galaxy’s position is currently supported by its licensing status. Since May 2026, they have held a BitLicense from the New York State Department of Financial Services as well as a money transmitter license, making it a reassuring regulated partner in the eyes of the bank. This collaboration comes at a time when Galaxy’s second-quarter report showed a net loss of $85 million, although its digital assets division posted an adjusted gross profit of $66 million, up 34% from the previous quarter.
“The future of finance will run on open, programmable rails, and we believe first-mover banks will define the next era,” said Galaxy Israel CEO Lior Lamesh, responding to the partnership.
Testing Recently Changed Regulations
Although the Bank of Israel still holds the key to approval, the playing field in Israel today is far different compared to 2022. Throughout 2026, local authorities began dismantling the walls that had previously blocked the crypto industry.
In the middle of the year, the Bank of Israel eliminated the deposit delay policy and strictly prohibited banks from issuing blanket rejections of funds from licensed crypto providers. The Capital Market Authority of Israel also established wallet security standards and measurable capital requirements: 2 million shekels for non-custodial services and 2.5 million shekels for custodial services. Finally, a circular issued on August 1 opened the door to trading for the top 50 crypto assets with a market capitalization above $500 million.
The regulatory infrastructure has been built and a regulated partner has been secured. Leumi’s grand plan is now back on the desk of the Bank of Israel - the same gatekeeper that halted their plans in 2022. It is only a matter of time to see if this time the gatekeeper is willing to turn the key.
As reported by Decrypt.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
