Israeli Prime Minister B. Netanyahu has proposed crypto as a possible way for the country to maintain financial channels if international sanctions increasingly restrict its access to the global banking system.
Speaking to Channel 10 in Israel shortly before the general election, Netanyahu argued that Israel should develop alternative financial mechanisms capable of operating beyond conventional banking networks. He named blockchain-based digital currencies as one possible means of avoiding restrictions imposed by foreign governments.
Israel has faced growing international criticism over its policies toward Palestinians, including settlement expansion within the occupied East Jerusalem and West Bank, increased settler violence, and statements opposing Palestinian statehood. Several European governments have taken measures against settlement-related organizations, individuals, and goods. Britain and other major economies have also discussed coordinated action concerning Israeli settlements.
Israel’s financial institutions have not, so far, been subjected to sweeping sanctions. Netanyahu nevertheless warned that the country should prepare for a possible deterioration in its economic relationships abroad, including reduced American support.
The U.S. provides substantial military assistance to Israel, but political debate over that support has intensified during the Gaza war. Netanyahu has argued that Israel should anticipate a future U.S. administration that may be less willing to provide extensive backing.
The question is whether cryptocurrency could realistically provide an alternative.
Digital currencies allow value to be transferred through blockchain networks without every transaction passing through a conventional bank. Sanctioned governments and organizations have previously explored crypto for certain international payments. However, financial specialists say such transactions cannot replicate the scale, infrastructure, and legitimacy provided by traditional banking.
Sanctions can also affect companies and financial institutions that conduct business with restricted entities. Moving a payment onto a blockchain does not necessarily remove those legal obligations. Businesses could still face penalties if transactions violate applicable sanctions regimes.
Israel’s economy is particularly dependent on international commerce. Its technology and defense industries rely on overseas suppliers, equipment, and components, making wider financial isolation difficult to overcome through an alternative payment system alone.
Experts have expressed serious concern about Netanyahu’s proposal, warning that sanctions could inflict severe long-term damage on the economy. They argued that crypto is an inadequate response to a problem that requires preserving international economic relationships.
The Bank of Israel has also rejected the idea, saying digital currencies cannot serve as a mechanism for avoiding sanctions. It urged the government instead to protect economic ties with Israel’s major trading partners and work to prevent sanctions from being imposed.
Netanyahu has dismissed the criticism, saying he appreciates the central bank’s advice but intends to pursue what he considers necessary.
Opposition leader Gadi Eisenkot has described the proposal as a national security risk. He accused Netanyahu of worsening Israel’s international isolation and warned that attempting to disconnect the economy from established financial networks could cause lasting damage.
Eisenkot also questioned how major international technology companies could conduct large acquisitions involving Israeli firms if conventional banks were deliberately bypassed.
These ongoing discussions in Israel remind crypto industry actors like BitMine Immersion Technologies Inc. (NYSE American: BMNR) about the talk that surrounded the inception of Bitcoin. It was then argued that the digital currency was a way to break away from the traditional financial system, but the reality has turned out to be different as the two are increasingly becoming integrated.
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