Netanyahu: "Blockchain is an alternative to sanctions" draws fire before vote

Israeli Prime Minister Benjamin Netanyahu has turned blockchain into an election issue. In an interview with an Israeli economic TV channel on Friday, he said the country is exploring blockchain technology and cryptocurrencies as a way around potential international banking sanctions. "Blockchain is an alternative to sanctions," he said, according to Cointelegraph. Israelis go to the polls on 27 October.

What Netanyahu said

Netanyahu described blockchain as a "national strategic tool". CryptoJungle, Israel's largest crypto media outlet, read that as a shift: crypto moving from an investment theme to part of the country's economic defence strategy. He gave no details on which assets, networks or institutions such a plan would use.

The background is a growing list of measures against Israel's West Bank settlements. About a dozen Western countries have announced sanctions on goods from the settlements after attacks by Jewish settlers on Palestinians and a rise in approved settlement construction. Economists quoted by The Times of Israel last month warned that such measures could spread to Israel proper.

The pushback came within hours

• The Bank of Israel said in a statement that cryptocurrencies "cannot be used as a route for bypassing sanctions". Its economists had already rejected the idea earlier in the week, after reports first surfaced that the government was preparing a blockchain plan.
• Gadi Eisenkot, leader of the Yashar party and one of the candidates hoping to replace Netanyahu, wrote on X on Saturday that "the BibiCoin vision is a threat to national security".
• Nadav Eyal, a columnist at Yediot Ahronot, wrote that crypto can move value outside some banking channels but "is not a substitute for a national financial system": it does not provide credit lines to banks, replace capital markets or persuade foreign companies to break sanctions.
• Ben Samocha, founder of CryptoJungle, told Cointelegraph that blockchain analysis lets authorities trace funds, cut off their fiat gateways and even freeze them, as the U.S. Treasury has done with Iran.

At an anti-government rally in Tel Aviv on Saturday evening, some protesters also took aim at the idea. "An economy that runs on the dark web makes us no better than our enemies," one told Cointelegraph.

Why crypto is a poor sanctions shield

Sanctions mostly bite through banks, correspondent accounts and trade finance, and none of those move onto a blockchain. Public ledgers are also transparent: every transfer can be followed by analytics firms, and the main exit points into dollars and euros are regulated exchanges and stablecoin issuers that comply with U.S. and EU rules. Issuers such as Tether can freeze tokens at a single address, as we explain in our USDT guide. That is why critics across the spectrum see the proposal as campaign rhetoric rather than an economic plan.

What to watch

Whether the idea survives depends first on Tuesday's vote. If Netanyahu stays in office, the next signal would be a concrete proposal from the Finance Ministry or the central bank's response to it; so far there is none.