Netanyahu draws rare Bank of Israel rebuke over crypto plan to blunt sanctions

Published October 25, 2026

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Why it matters

Prime Minister Benjamin Netanyahu told Channel 10 that Israel should prepare for possible banking sanctions by building a "bypass economy," and he confirmed that cryptocurrency and blockchain are among the options. Asked directly whether he meant crypto, he answered "Very true, very true," and added that blockchain was another possibility. He said he was preparing for a scenario in which broader sanctions are imposed on Israel. The Bank of Israel responded Saturday that cryptocurrencies cannot serve as a means of circumventing sanctions, and it urged the government to protect trade ties rather than pursue workarounds. More than 100 economists, including former Bank of Israel officials, a former central bank governor and several Nobel laureates, have signed a letter warning of higher unemployment and lower foreign investment. Gadi Eisenkot, Netanyahu's main rival in the 27 October election, called the crypto plan "madness," and Yair Lapid made similar attacks. Former Bank of Israel supervisor Yair Avidan argued that moving transactions onto a blockchain does not remove sanctions or override legal prohibitions. The remarks come as diplomatic relations worsen. Last month, Britain, France and Canada moved to block imports from Israeli settlements in the West Bank, adding to a series of measures against Israel's settlement policy.

It is not yet clear which sanctions Netanyahu is planning for, or whether any are being considered by a foreign government. Details of what a bypass economy would involve, including any specific crypto or blockchain mechanism, have not been made public, and no formal government proposal has been published.

For attorneys, the central issue is the conflict between the prime minister and the Bank of Israel. The central bank has formally rejected crypto as a sanctions workaround, so any compliance advice on digital-asset transactions involving sanctioned parties or jurisdictions should account for that position. Watch for a written government plan, any move by the Bank of Israel or financial regulators to issue binding guidance, and whether the election outcome changes the policy. Avidan's point that blockchain does not override legal prohibitions is the core legal argument to track.