Netanyahu Floats Blockchain as a Way Around Potential Financial Sanctions in Israel

Israeli Prime Minister Benjamin Netanyahu said on Friday that Israel could turn to blockchain and cryptocurrencies to avoid economic strain from potential international financial sanctions. The comment immediately drew pushback from the Bank of Israel and election rivals, which is exactly the sort of signal PSPs and banks watch when a government starts treating crypto as a sanctions workaround.

1. Netanyahu told a local television interviewer that Israel is exploring blockchain technology and cryptocurrencies as a means of circumventing potential banking sanctions. “Blockchain is an alternative to sanctions,” he said in an interview with Israel’s Channel 10 economic network on Friday.
2. He described blockchain as a “national strategic tool,” which CryptoJungle, Israel’s largest crypto media platform, said marked a shift in the government’s posture on digital currency: from an investment topic to part of the country’s economic defense strategy.
3. The backdrop is a fresh sanctions risk. A dozen Western countries have announced sanctions targeting goods from Israeli settlements in the West Bank in response to attacks on Palestinians by Jewish settlers and an increase in settlement construction approved by Netanyahu’s right-wing government. Economists and industry figures told The Times of Israel last month that those sanctions could extend into Israel proper.
4. Several candidates seeking to replace Netanyahu in the Oct. 27 elections, along with the head of the Bank of Israel, rejected the idea quickly. Yashar party leader Gadi Eisenkot wrote on Saturday morning in an X post that the “BibiCoin vision is a threat to national security.” The Bank of Israel said cryptocurrencies “cannot be used as a route for bypassing sanctions.”
5. The media and crypto industry reaction was equally blunt. Yediot Ahronot columnist Nadav Eyal wrote on X that digital currencies can move value outside some traditional banking channels, but “they are not a substitute for a national financial system.” Ben Samocha, founder of CryptoJungle, told Cointelegraph that “crypto & blockchain-based solutions are not the tool for bypassing sanctions.”

For high-risk PSPs, the practical point is not whether a politician likes blockchain. It is that sanctions pressure, banking access, and crypto infrastructure are now being discussed in the same sentence by a government at election time. When that happens, the compliance question stops being theoretical very quickly.