Just days ahead of Israel’s scheduled 27 October parliamentary election, sitting Prime Minister Benjamin Netanyahu publicly floated the idea of developing cryptocurrency frameworks as a workaround to potential international banking sanctions during a Friday appearance on Channel 10’s economic affairs broadcast.
During the interview, Netanyahu explicitly stated that his administration was actively exploring alternative economic systems designed to bypass restrictive global financial measures, and confirmed that digital cryptocurrencies were a core part of that strategy when pressed by the host. “We need to prepare ways to evade banking sanctions through an alternative economic system,” Netanyahu told viewers. “You know what that means – the currencies that can bypass them. I’m working on that, too.”
Within 24 hours, the Bank of Israel issued a formal public rebuke of the proposal, pushing back firmly against the prime minister’s framing of digital assets as a viable sanctions mitigation solution. The central bank’s Saturday statement emphasized that cryptocurrencies could never serve as a functional replacement for Israel’s longstanding economic and trade ties with its core global trading partners, and that the most prudent path to protecting national economic stability was to proactively avoid broad sanctions in the first place rather than planning to circumvent them. The bank also noted that Israel’s elected political leadership bore full responsibility for shielding critical cross-border economic partnerships from disruption.
Later that same Saturday, Netanyahu walked back the urgency of his initial remarks slightly, framing cryptocurrency as just one of several contingency options on the table, and noting that he would review the central bank’s feedback. “I hear the objections and I take them into account,” he said. “I thank the Bank of Israel for their advice. I listen, but I do what I think is right.”
The unorthodox proposal has drawn widespread condemnation far beyond the central bank, with sitting opposition lawmakers, veteran former banking executives, and leading Israeli economists lining up to criticize the plan as reckless. More than 100 prominent Israeli figures including two Nobel Prize laureates, top business leaders, and retired senior government officials signed an open letter warning that broad international banking sanctions would cause irreversible, catastrophic harm to Israel’s national economy, with devastating ripple effects across the domestic banking sector, export operations, global investor confidence, and the country’s world-renowned high-tech industry. Critics warn that openly planning to evade international sanctions would itself erode foreign trust in Israel’s financial system and accelerate the very economic isolation the country should be working to avoid.
The policy debate has erupted against a backdrop of mounting global scrutiny of Israeli government actions related to illegal settlement expansion and settler violence in the occupied West Bank. In September, the United Kingdom joined 11 other nations in announcing targeted sanctions focused on goods produced in West Bank settlements, with additional punitive measures planned against individuals and corporate entities that profit from or enable settlement activity. Multiple other key Israeli trade partners including France, Canada, and Spain have also confirmed they are moving forward with, or actively evaluating, similar sanctions targeting settlement-linked commerce.
Opposition leader and former prime minister Yair Lapid launched a scathing attack on Netanyahu’s proposal via social media platform X, arguing that the prime minister was not working to prevent sanctions, but rather proactively preparing Israel for the type of pariah status reserved for heavily sanctioned isolated nations. “Netanyahu’s proposal for evading potential sanctions belongs to countries like Iran, Russia, and Venezuela – nations whose banks are cut off from the world, whose companies cannot accept payments, and whose young people are fleeing,” Lapid wrote. Former finance minister and Yisrael Beiteinu party head Avigdor Liberman similarly criticized Netanyahu for openly acknowledging the risk of economic isolation without presenting any actionable plan to prevent that outcome, noting the prime minister was already outlining a “sanctions-bypassing economy” before any punitive measures had been imposed.
Netanyahu also used his recent public appearances to raise the alarm that long-running U.S. military aid to Israel may not continue indefinitely, citing shifting domestic political dynamics in Washington. He noted that the $3.8 billion in annual U.S. military assistance — which breaks down to $3.3 billion in direct foreign military financing and $500 million earmarked for joint Israeli-American missile defense programs, per the existing bilateral memorandum of understanding — was not guaranteed forever, even though Congress has approved billions in additional emergency supplemental aid for Israel since the October 7, 2023, Hamas-led attacks, with U.S. President Joe Biden signing the latest multi-billion dollar military support package into law in April 2024. “If you think we will continue receiving what I secured twice – tens of billions of dollars in American aid for the defence budget – you’d better prepare yourselves and get used to the idea that this will not continue,” Netanyahu said. “That is because America has changed, not because Israel has changed. It will end. It is only a matter of time.”
‘Diplomatic and financial isolation’: Netanyahu’s crypto plan to bypass sanctions draws rebuke
