Bank Leumi to offer Bitcoin trading to 2.5M clients by 2027

Bank Leumi, Israel's largest commercial bank, will offer Bitcoin, Ethereum, and Solana trading to 2.5 million retail clients through a partnership with Galaxy Digital and its custody subsidiary GK8, with rollout planned for early 2027.

The service will operate through Leumi Trade and the Pepper mobile app, letting customers buy, hold, and sell digital assets alongside stocks and bonds. Galaxy Digital, which manages approximately $9 billion in client assets and received a BitLicense from New York's Department of Financial Services in May 2026, will provide the digital asset infrastructure, according to the partnership announcement.

This is Leumi's second attempt at crypto. In 2022, the bank partnered with Paxos to offer Bitcoin and Ethereum trading through Pepper Invest, but the Bank of Israel declined to grant regulatory approval and the project was shelved. The regulatory environment has since shifted: Israel's Banking Supervision Department eliminated its automatic crypto deposit delay in mid-July 2026, and the Capital Market Authority has distributed its third consecutive VASP draft circular covering capital requirements, cybersecurity standards, and customer asset segregation.

The stakes extend beyond Leumi. More than 25 percent of Israelis have engaged with cryptocurrencies in the past five years, and a KPMG analysis projects a regulated crypto ecosystem could generate roughly 70,000 jobs by 2035 and NIS 120 billion (approximately $40.5 billion) in economic benefits. Leumi's move creates direct competitive pressure on Hapoalim, Mizrahi Tefahot, and Discount — none of which has announced a comparable offering — and the Bank of Israel's formal sign-off remains the key gate between announcement and launch.

GK8's air-gapped vault is the technical linchpin

The technical backbone of the deal is GK8, the Israeli-founded custody firm Galaxy acquired for $44 million in February 2023. GK8's Impenetrable Vault uses patented one-way communication technology to create and broadcast transactions without any digital input connection — private keys never touch a network, even momentarily. The system processes up to 7,500 signatures per second and includes an unlimited multi-party computation vault for automated, policy-governed transactions.

For Leumi, the white-label arrangement means the bank operates the custody infrastructure through GK8's technology rather than delegating to a third-party exchange. That distinction carries regulatory weight: Israeli banking regulators are more comfortable with a licensed bank controlling its own custody platform. GK8's Israeli roots — the company was founded in Tel Aviv in 2018 — also make the partnership a domestically anchored solution.

Leumi has not published fee structures, bid-ask spread policies, or whether customers can withdraw crypto to external personal wallets. The bank will handle tax reporting in compliance with Israeli Tax Authority guidelines. Customers will not hold their own private keys — the bank will hold custody through GK8's infrastructure, exactly as it holds custody of stocks and bonds in Leumi Trade.

One structural caveat: cryptocurrency holdings in a custodial bank account do not carry deposit insurance protection equivalent to shekel-denominated deposits. If Bank Leumi were to enter insolvency proceedings, customers' crypto positions would be treated as assets of the estate alongside other claims.

The Bank of Israel's formal response is the critical variable. Leumi's 2022 effort is a reminder that bank announcements and bank launches are not the same thing. Between now and early 2027, the key signals are the central bank's approval timeline, the fee structure Leumi publishes, and whether competing Israeli banks announce similar partnerships.

This article is for informational purposes only and does not constitute investment advice.