Netanyahu says Israel is charting a crypto‑based backup plan in case banking sanctions hit and US defence aid shrinks, sparking a clash with the central bank and economists.
In a televised interview with Channel 10, Prime Minister Benjamin Netanyahu warned that Israel could soon confront banking sanctions from foreign regulators. He said the government has already ordered a study of alternative payment methods, specifically mentioning blockchain and cryptocurrency as possible tools to keep the economy operational if traditional channels close.
The prime minister also signalled that the long-standing flow of U.S. military aid is no longer a certainty. “If you think we will keep receiving the tens of billions of dollars that I secured in the past, prepare yourself – America has changed,” Netanyahu told the audience, adding that Israel must become resilient to a potential reduction in American defence financing.
Government’s crypto blueprint and the search for sanction-proof currencies
Netanyahu described a three-part approach: first, identify foreign currencies that could bypass a banking embargo; second, develop a digital-ledger system capable of handling high-volume transactions; and third, integrate that system with existing financial infrastructure.
He emphasized that a digital token would not be a mere hobby project but a strategic national asset.
When asked whether blockchain could actually shield Israel from sanctions, the prime minister replied, “One of them, certainly. I have already asked for a concrete plan.” He declined to disclose details about the team working on the proposal, but indicated that senior officials from the Ministry of Finance and the Innovation Authority had been briefed.
Central bank pushes back, citing legal and practical limits
The Bank of Israel, led by Governor Prof. Amir Yaron, issued an unusually direct statement rejecting the notion that digital currencies could serve as a work-around for sanctions. “Cryptocurrencies cannot serve as a means of circumventing sanctions,” the central bank wrote, urging political leaders to focus on preserving trade links rather than seeking technical loopholes.
Former Bank of Israel supervisor Yair Avidan explained that any blockchain-based payment still depends on banks, payment processors and counterparties that are themselves subject to sanctions compliance. “Moving a transaction onto a blockchain does not erase the legal obligations attached to it,” he said, adding that the technology is useful for emergency resiliency but not for evading international law.
Economic veterans also voiced concerns. Former Finance Ministry director-general Yarom Ariav warned that flirting with crypto alternatives could place Israel alongside isolated economies such as Iran or apartheid-era South Africa. He cautioned that investors might flee, the shekel could depreciate, and inflation could rise if the country appears to be abandoning the established global banking system.
International pressure and the broader sanctions landscape
A recent database compiled by the Jewish People Policy Institute (JPPI) recorded fifteen distinct measures targeting Israel in the United States—the highest count among all nations tracked. Spain, the United Kingdom, Turkey and Belgium follow with fewer entries. The report clarifies that many of these actions are not sweeping governmental bans but legislative proposals, academic boycotts, or calls for restrictions on defense sales.
Even though the United States remains Israel’s closest security and trade partner, the sheer volume of potential sanctions reflects the complexity of the bilateral relationship. Various U.S. congressional resolutions have called for limiting arms exports, while university groups have advocated for academic boycotts. These diverse pressures illustrate why the Israeli government sees value in exploring financial diversification.
Industry voices offered a more nuanced view. Nir Hirschman, CEO of the Crypto Companies Forum, welcomed the attention on blockchain, noting that public ledgers provide transaction transparency that can actually deter illicit activity. He stressed that crypto should not be treated as a “money-laundering sanctuary,” and offered his organization’s cooperation with regulators to shape sensible reforms.
In parallel, Tomer Sharoni, head of a cryptocurrency-intelligence firm, reminded policymakers that blockchain transactions leave immutable records, making it possible for authorities to trace flows even across borders. His point underscored the tension between the allure of a sanction-proof digital currency and the reality of forensic capabilities.
Overall, Netanyahu’s public push for a crypto-enabled contingency plan has sparked a heated debate among Israel’s financial guardians, academic experts, and the wider tech community. While the prime minister insists the proposal is a precaution, critics argue that it could undermine investor confidence and isolate the nation from the very systems it seeks to protect.
As the discussion unfolds, the Israeli government appears poised to commission a detailed feasibility study, even as the central bank and former officials continue to lobby for a more conventional diplomatic strategy. The coming weeks will likely reveal whether blockchain becomes a genuine pillar of Israel’s economic resilience or remains a rhetorical counter-measure in a fraught geopolitical climate.
