What to know:
- Israel’s crypto voluntary disclosure program targeted $1 billion in reported crypto gains but has generated only $50 million so far.
- Just 58 taxpayers used the voluntary disclosure program despite immunity from criminal charges.
- The outcome highlights the challenges governments face when trying to bring crypto profits into the tax system.
The launch of Israel’s crypto voluntary disclosure program has not delivered the response authorities anticipated. Introduced in August 2025, the initiative offered cryptocurrency investors protection from criminal charges if they amended previous tax filings and settled outstanding tax obligations.
Officials believed the measure would encourage the declaration of billions of dollars in previously unreported crypto profits. However, participation has remained limited, and the expected wave of disclosures has yet to materialize.
According to reports, the tax authority expected to collect as much as $1 billion in taxes through the program. Instead, disclosures have amounted to only about $50 million in crypto capital. Even more striking, only 58 taxpayers have chosen to participate.
The result raises questions about whether incentives alone are enough to encourage compliance in the digital asset sector.
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Why Crypto Voluntary Disclosure Has Struggled
Experts point to one major issue: uncertainty. Under the program, crypto holders can avoid criminal charges if their holdings were worth less than roughly $522,000 at the end of 2024, provided they submit accurate reports and pay their taxes before Aug. 31, 2026. However, some tax professionals believe the process does not provide enough protection for participants.
Iftach Simhony, a certified public accountant and tax department head at a law firm in Israel, noted that the lack of anonymity can discourage taxpayers. If investors believe the risk of being caught is low, they may see little reason to voluntarily disclose their holdings. That calculation appears to be limiting participation.
Crypto Voluntary Disclosure and the Global Tax Debate
The Israeli experience reflects a wider challenge facing governments around the world. As cryptocurrency adoption grows, tax authorities are searching for ways to improve compliance without discouraging innovation.
In the United States, lawmakers recently introduced the PARITY Act, which would push regulators to consider a de minimis exemption for small crypto transactions.
The proposal recognizes that reporting every minor digital asset transaction can be difficult and burdensome. For now, Israel’s results show that crypto voluntary disclosure programs may need stronger incentives, greater certainty, or additional protections if governments hope to bring more crypto wealth into the tax system.
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