Netanyahu’s pitch: Can Israel use crypto to evade economic sanctions?
Prime Minister Benjamin Netanyahu has proposed using cryptocurrency to bypass potential international economic sanctions, two days before the general elections.
The Israeli government is considering a radical shift in its financial strategy, with Prime Minister Benjamin Netanyahu advocating for the use of cryptocurrency to shield the economy from potential sanctions.
Netanyahu stated that blockchain-based digital currencies could serve as an alternative economic system to bypass banking sanctions and keep Israel connected to the global financial network.
The proposal comes as Israel faces growing international isolation over its military actions in Gaza and the expansion of settlements in the occupied West Bank.
Netanyahu’s pitch
In an interview with Israel’s Channel 10, Netanyahu said the country must prepare ways to evade banking sanctions through an alternative economic system.
The prime minister warned that financing for Israel’s military would eventually end, citing a shift in American support after the tenure of US President Donald Trump.
He also faces an arrest warrant from the International Criminal Court for war crimes and is the subject of a genocide case at the International Court of Justice.
International pressure
Israel has killed more than 74,500 Palestinians since launching its military campaign in Gaza three years ago, drawing widespread condemnation and legal challenges.
Last month, at least 12 major economies, including the United Kingdom, pledged coordinated measures against Israeli settlements in the occupied West Bank.
The European Union has sanctioned settlement-linked individuals and groups, while Spain and Ireland have introduced restrictions on settlement goods.
The Netherlands brought a broader ban on the import, purchase, and sale of settlement goods into force in September.
Criticism from the central bank
The Bank of Israel has firmly rejected Netanyahu’s plan, stating that cryptocurrencies cannot be used as a route for bypassing sanctions.
The right thing for Israel’s economy is preserving the economic relationships with our principal trade partners and focusing on preventing sanctions and their negative influence on the economy,” the central bank said.
The central bank argued that the issue is the responsibility of the political echelon and that the government should act to prevent sanctions rather than circumvent them.
Netanyahu responded that he is grateful for the bank’s advice but that he will do what he thinks is best.
Opposition warns of disaster
More than 100 experts and former Israeli officials expressed grave concern over the proposal, accusing Netanyahu of failing to grasp the seriousness of the threat.
They described the crypto-based solution as a strategy more commonly associated with criminal organisations and warned that sanctions would cause enormous and irreversible damage to the Israeli economy.
Yashar party leader Gadi Eisenkot called Netanyahu’s vision a threat to national security and accused the prime minister of dismantling Israeli society and the military.
Eisenkot questioned how foreign companies like Google could conduct business if they were required to bypass international banks and pay in crypto.
The limits of crypto
While sanctioned actors like Russia have reportedly used cryptocurrencies for cross-border payments, experts note that digital assets cannot replace conventional banking at the scale of today’s economy.
Crypto can serve as a parallel medium for payments, but it cannot solve the fundamental problem of financial isolation, which restricts access to financial institutions and penalises third parties.
Israel’s economy relies heavily on international trade and technology supply chains, meaning that even if businesses use crypto for payments, the transactions would still be illegal under sanctions regimes.
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