Bank of Israel Rejects Netanyahu Blockchain Sanctions Plan Bid - Blockonomi

by · Blockonomi

TLDR:

Table of Contents

Toggle

  • Blockchain sanctions plan drew a direct rebuke from the Bank of Israel, which said cryptocurrencies cannot bypass sanctions and urged leaders to preserve trade ties.
  • Netanyahu said he had asked advisers to prepare a proposal before the October 27 election, but gave no details about currencies, networks, or an implementation timetable.
  • Eisenkot and more than 100 economists criticized the proposal, warning that possible sanctions could deepen isolation and hurt investment, employment, and Israel’s economic standing.
  • Critics said crypto cannot replace bank credit or global capital markets, while traceable blockchain transactions may still be identified or blocked by authorities.

Prime Minister Benjamin Netanyahu said Israel should prepare a blockchain sanctions plan if international measures restrict its banking system. In a Friday interview, he described cryptocurrency and blockchain as possible tools for an alternative economy if sanctions hit. He confirmed that he had asked advisers to develop a plan, but gave no design or timetable for implementation. 

The remarks came two days before Israel’s October 27 election, amid warnings foreign measures could affect Israel’s wider economy. The Bank of Israel formally rejected crypto as a route around international sanctions. It urged leaders to preserve trade ties and prevent further restrictions.

Netanyahu Blockchain Sanctions Plan Draws Institutional Pushback

Netanyahu spoke on Channel 10 on Friday. He said Israel should prepare for possible sanctions on banks and other economic restrictions. Asked whether he meant crypto, he agreed, then described blockchain as another option. He said advisers were already preparing a plan.

The blockchain sanctions plan remains undefined. Netanyahu did not identify the currencies, networks, government agencies, or legal changes under consideration. The Block reported that he gave no timetable or implementation details. It describes contingency planning, not an operating national payment system.

Britain and 11 other Western countries announced measures targeting settlement goods. The measures focus on settlements, though economists warned economic effects could reach Israel proper. Netanyahu cited the possibility of banking restrictions and said alternative payment channels could help the country respond.

The election sharpened political tensions. Netanyahu’s remarks came two days before voters choose a new Knesset on October 27. Opposition leaders have argued that his government’s policies contributed to Israel’s international isolation. The blockchain sanctions plan became another point of disagreement during the campaign.

Crypto Proposals Face Practical Limits Beyond Digital Transfers

The Bank of Israel said cryptocurrencies cannot serve as a route for bypassing sanctions. It urged political leaders to maintain economic ties with major trading partners and focus on preventing restrictions. Its statement rejected the idea that digital assets could protect the national economy from financial pressure.

The blockchain sanctions plan also drew criticism from opposition figure Gadi Eisenkot. On X, Eisenkot called it the “BibiCoin vision” and said it threatened national security.

He also warned it could worsen isolation and deter investment. He asked how Israeli technology firms would receive overseas payments if foreign banks shunned crypto. At Saturday’s anti-government rally in Tel Aviv, attendees also criticized the proposal, extending backlash beyond political leaders.

Over 100 economists and former Bank of Israel officials signed a letter opposing the plan on Sunday, Reuters reported. They warned sanctions could reduce foreign investment, increase unemployment, and weaken Israel’s economic standing. The warning focused on the consequences of financial isolation, beyond payment rails.

Digital assets can move value outside some conventional banking channels, but that does not make sanctions disappear. Blockchain transactions can be traced, and authorities or service providers may identify or block wallets linked to sanctioned entities. A blockchain sanctions plan may move value, but it cannot hide every transaction record.

The blockchain sanctions plan faces practical barriers a transfer alone cannot solve. Crypto cannot replace access to trade finance, bank credit, global capital markets, or foreign companies willing to transact. A business may still need compliant banks, insurers, suppliers, and customers for cross-border deals.

Columnist Nadav Eyal said crypto cannot replace bank credit, capital markets, or firms willing to trade internationally. CryptoJungle founder Ben Samocha also said digital assets were not a suitable sanctions workaround. He pointed to blockchain investigations that can trace funds and restrict their fiat access.

Netanyahu said Saturday he would consider the Bank of Israel’s criticism but would do what he thought best. He has not named the advisers, blockchain, currencies, or implementation schedule for the plan.

Advertise Here