Bank of Israel Rejects Netanyahu’s Crypto Plan to Bypass Sanctions

Highlights:

• The Bank of Israel rejected Netanyahu’s crypto proposal, saying cryptocurrencies cannot help the country bypass financial sanctions.
• Netanyahu asked advisers to explore blockchain payments as Israel faces possible international banking restrictions.
• The central bank urged Israel to protect its global financial ties rather than seek alternatives through cryptocurrencies.

The Bank of Israel has rejected Prime Minister Benjamin Netanyahu’s proposal to use cryptocurrencies to bypass possible international financial sanctions. The central bank warned that digital assets cannot replace Israel’s existing financial relationships and urged the government to protect its ties with major trading partners.

According to an October 24 Financial Times report, the disagreement followed Netanyahu’s comments about preparing an alternative financial system. The Israeli prime minister raised the idea during an October 23 interview with Channel 10, warning that Israel could face banking sanctions as international pressure grows.

🇮🇱 JUST IN: The Bank of Israel has pushed back against Netanyahu’s reported idea of using crypto to bypass sanctions, stating that crypto “cannot be used as a route for bypassing sanctions.”

Netanyahu’s response: “I listen, but I do what I think [is best].” 👀#Crypto #Bitcoin… pic.twitter.com/74MjLSpTs4

— Bitcoin World News (@BitcoinWorldN) October 25, 2026

Netanyahu Asked Advisers to Prepare a Blockchain Plan

During the interview, Netanyahu said Israel should prepare for restrictions that could affect its banks and payments with other countries. He suggested cryptocurrency and blockchain as possible tools to keep money moving if conventional financial channels became harder to use.

Asked about blockchain, he confirmed it was one of the options and said he had already requested a plan. However, he did not explain how the system would work, which digital currencies it might use, or when it could be introduced. Israel has not announced that it is adopting a crypto-based payment system.

In its October 24 statement, the Bank of Israel said cryptocurrencies “cannot be used as a route for bypassing sanctions.” It added that Israel should maintain economic ties with its principal trading partners and work to prevent restrictions rather than seek ways around them. The bank also said the country’s political leadership bore responsibility.

Why the Central Bank Opposes the Crypto Proposal

Blockchain allows people to transfer digital assets without using a traditional bank for every transaction. But using cryptocurrency does not remove legal restrictions on payments or trade. Many blockchain transactions can be traced. Businesses, financial institutions and crypto exchanges may also have to follow sanctions rules. A payment could therefore still face legal or practical barriers, even if it moves through a crypto network.

Former Bank of Israel banking supervisor Yair Avidan also challenged the proposal. He said moving payments onto a blockchain would not remove sanctions or change the obligations of companies taking part in those transactions. Netanyahu later addressed the criticism in an October 24 interview with Channel 14. He said cryptocurrency was only one option and might not ultimately be used. He also said he would consider the central bank’s advice but make his own decision.

International Sanctions Raise Concerns About Israel’s Economy

The debate comes as several Western countries increase pressure over Israeli settlement expansion and settler violence in the occupied West Bank. In September, the United Kingdom and 11 other countries announced plans to introduce or consider restrictions on trade with Israeli settlements. These measures target settlement-related activity rather than amounting to a general ban on financial dealings with Israel.

Israeli opposition leaders have also criticized the crypto proposal. Gadi Eisenkot warned that relying on an alternative financial system could damage foreign investment and commercial relationships. Yair Lapid likewise questioned the prospect of Israel becoming isolated from international banking. Netanyahu has not announced a timetable or published the proposed blockchain plan.