Bank of Israel, opposition heads pan PM’s proposal to use crypto to evade sanctions

The Bank of Israel on Saturday came out against Prime Minister Benjamin Netanyahu’s comments that Israel should prepare for potential international sanctions and use cryptocurrency in order to circumvent them, as opposition leaders also blasted the premier’s statements.

In a statement, the central bank rejected Netanyahu’s proposition, saying that cryptocurrencies “cannot be used as a route for bypassing sanctions.”

“The right thing for Israel’s economy is preserving the economic relationships with our principal trade partners and focusing on preventing sanctions and their negative influence on the economy,” the central bank said. “This issue is within the responsibilities of the political echelon, and it should act to advance it.”

Netanyahu responded to the bank’s criticism later on Saturday, saying he would take it into account.

“I hear the resistance; I am taking it into account,” he told Channel 14. “I thank the Bank of Israel for the advice. I listen, but I do what I think [is best].”

In an interview with the Channel 10 economic network on Friday, Netanyahu said “that there could be banking sanctions” against Israel by the international community. He said that crypto and the blockchain — a decentralized digital system that does not rely on central government authorities — could be options for facing the challenge, and that he had asked his advisers to prepare a plan for their utilization.

Cryptocurrency can weaken the effectiveness of financial sanctions by creating alternative payment channels, but it is not foolproof, as transactions on many blockchain networks can still be traced.

Netanyahu’s remarks came after Britain and 11 other Western countries recently announced sanctions targeting goods from Israeli settlements in the West Bank, in response to a wave of settler attacks on Palestinians and massive settlement construction approved by Netanyahu’s hard-right government.

While the UK-led sanctions are designed to specifically target the settlements, economists and industry figures interviewed by The Times of Israel last month warned that the economic repercussions could extend into Israel proper.

Yashar party leader and election frontrunner Gadi Eisenkot also tore into Netanyahu for the comments, accusing the premier on Saturday of “dismantling the Israeli economy.”

“The BibiCoin vision is a threat to national security,” Eisenkot wrote on X, in a play on Netanyahu’s nickname. “After he finished dismantling Israeli society and weakening the IDF, Netanyahu has marked the next target: the dismantling of the Israeli economy for generations ahead.”

Eisenkot charged that Netanyahu “has lost touch with reality… and is suggesting as a ‘solution’ to the nadir in international [relations] that he himself brought upon us — to disconnect Israel from the global economy.

“How will an Israeli tech firm with customers overseas receive payments or foreign investment? How will Google buy an Israeli company on the condition that it bypass an international bank and pay in crypto?” Eisenkot wondered.

He warned that if Netanyahu’s vision is implemented, “Israelis will lose their pensions and all their investments, and many of them will leave the country,” resulting in “fewer jobs in the market, less money for health and education and the collapse of national security.”

B’Yachad party leader Naftali Bennett also came out strongly against the notion, saying he was “horrified to hear Netanyahu’s defeatist and gloomy vision.”

“In his view, Israel will become a withdrawn and outcast country in the world, disconnected from the economy, from academia, and global technology, so that we are forced to move to a crypto and isolated economy,” he said.

Yisrael Beytenu chairman Avigdor Liberman said Netanyahu’s comments showed the extent to which he was “disconnected from reality.”

“The crypto industry isn’t a secret system that lets you vanish under the radar. Transactions on blockchain networks are traceable, and even today, countries and authorities know how to identify and block activity in digital wallets linked to entities under sanctions,” he wrote on X.

“But the major absurdity is that Bibi is now presenting crypto as a solution, while he himself blocked the measures designed to regulate and promote the industry in Israel. As chair of the Knesset’s high-tech subcommittee, I convened a series of meetings on regulating crypto and digital asset activity. The one who prevented those moves from advancing was Bibi,” Liberman said, adding that as finance minister he also moved to regulate the industry.

Liberman added that Israel needed to “prevent sanctions” instead of evading them.

Netanyahu’s Friday comments were reminiscent of ones he made last year, when he acknowledged that Israel was facing increasing isolation on the world stage, and said it would have to become a more self-reliant “super-Sparta” in the years to come.

After those remarks sparked an uproar, he tried to walk them back and proceeded to highlight the support that Israel still enjoys from India and countries in Latin America.