Netanyahu Calls Blockchain a Sanctions Alternative—and Israel’s Critics Push Back

Benjamin Netanyahu has moved blockchain from a technology talking point into a much more serious debate about Israel’s economic resilience.

In a television interview ahead of Israel’s Oct. 27 election, the prime minister said the country is exploring digital currencies and blockchain as possible tools for dealing with future financial sanctions.

The reaction was immediate—and sharply skeptical.

The dispute is not really about whether crypto can move money. It can.

The question is whether blockchain can replace the banking relationships, credit markets, settlement systems, and corporate access that sanctions can disrupt. Israel’s central bank and Netanyahu’s opponents say it cannot.

Netanyahu asks for a blockchain plan

Cointelegraph reports that Netanyahu described blockchain as an alternative in a discussion about building what he called a “bypass economy.” He said he had already asked for a plan to be prepared and framed the technology as a possible national strategic tool.

The comments come as several Western countries have imposed sanctions on goods tied to Israeli settlements in the West Bank. Some economists and industry figures have warned that broader measures could eventually reach more of Israel’s economy.

Columnist Nadav Eyal summarized Netanyahu’s remarks and then drew a hard distinction between moving value outside some traditional channels and replacing the machinery of a modern national economy.

2/"You need to organize a bypass economy," he said, pointing to digital currencies. Asked whether blockchain could be the alternative, he said yes: "One of them. Certainly. I've already asked for a plan to be prepared."

A sanctions-bypass economy is the survival strategy of…

— נדב איל Nadav Eyal (@Nadav_Eyal) October 24, 2026

Eyal’s point is straightforward: digital assets may offer another rail for transferring value, but they do not create foreign-bank credit lines, reopen international capital markets, or persuade companies to ignore sanctions that prohibit them from doing business with Israel.

The central bank rejects the sanctions argument

The Bank of Israel rejected the proposition that cryptocurrencies could serve as a path around sanctions. That position reflects an important practical reality.

Public blockchains can be transparent enough for investigators to trace flows, while regulated exchanges and stablecoin issuers can freeze or block access at key conversion points.

Ben Samocha, founder of Israeli crypto outlet CryptoJungle, told Cointelegraph that blockchain-based systems are not an effective sanctions-bypass tool. He pointed to the U.S. Treasury’s ability to trace illicit funds and pressure the gateways that connect crypto to the banking system.

That does not make blockchain irrelevant to national infrastructure. Tokenized settlement, digital identity, resilient payment networks, and regulated stablecoins can all have legitimate strategic uses.

Those uses are different from claiming that crypto can substitute for international banking access.

Political opponents make it an election issue

Gadi Eisenkot, a former military chief and one of the candidates seeking to replace Netanyahu, called the proposal a threat to national security and attacked what he labeled the “BibiCoin” vision.

נתניהו מפרק את הכלכלה הישראלית: חזון ה-BibiCoin הוא איום על הביטחון הלאומי

אחרי שסיים לפרק את החברה הישראלית, ולאחר שהחליש את צה״ל – נתניהו מסמן את היעד הבא: פירוק הכלכלה הישראלית דורות קדימה.

היו סימנים מקדימים לאורך מסע הבחירות הללו אבל בשבוע החולף קיבלנו עדות סופית ובלתי…

— Gadi Eisenkot – גדי איזנקוט (@gadi_eisenkot) October 24, 2026

The argument now sits at the intersection of crypto policy, foreign relations, and election politics. Netanyahu’s statement gives blockchain a larger role in the campaign, but it also invites scrutiny of what the technology can realistically do.

A serious national blockchain strategy would need governance, legal authority, access controls, cybersecurity standards, liquidity, and cooperation from institutions that connect digital assets to the real economy. A sanctions workaround takes much more than a wallet and a token.

Netanyahu has opened the door to that debate. The first response from Israel’s financial establishment is clear: blockchain may be a tool, but it is not a replacement for the financial system the country would be trying to protect.

Join the conversation!

We have no tolerance for comments containing violence, racism, profanity, vulgarity, doxing, or discourteous behavior. If a comment is spam, instead of replying to it please click the icon below and to the right of that comment. Thank you for partnering with us to maintain fruitful conversation.