Netanyahu blockchain plan for sanctions rejected by Bank of Israel

The Netanyahu blockchain plan has drawn a rare public rebuke from Israel's central bank. Prime Minister Benjamin Netanyahu said in a television interview on Friday, Oct. 23, that Israel must prepare for possible banking sanctions and that he had asked for a plan using blockchain technology. On Saturday, the Bank of Israel said that "cryptocurrencies cannot serve as a means of circumventing sanctions," Ynet reported.

What happened

"We need to understand that there could be banking sanctions. You need to prepare an alternative economic system, and you know what that is, and you know which currencies can bypass this," Netanyahu told Channel 10, according to The Jerusalem Post. Asked whether blockchain could be one answer, he said: "One of them, certainly. And I've already asked for a plan to be prepared for that."

He also warned that U.S. military aid worth "tens of billions of dollars" should not be taken for granted "because America has changed," i24NEWS reported, and said he "unequivocally" disagreed with Bank of Israel governor Amir Yaron's warnings about defense spending. A new Jewish People Policy Institute database counts 15 recorded measures against Israel in the United States, ahead of Spain with 10 and the U.K. with eight, The Jerusalem Post reported.

The central bank urged the government to keep ties with trading partners and prevent sanctions instead. "This issue falls within the responsibility of the political leadership," it said. Officials in economic ministries, and even senior figures in the prime minister's office, said they knew of no team working on such a plan, Ynet reported.

Why it matters

Experts say the idea misreads how sanctions work. "Blockchain is not a solution for circumventing sanctions," said Yair Avidan, who once oversaw Israel's banks for the central bank, noting that blockchain payments still need banks, payment providers and counterparties that remain bound by sanctions rules. Former Finance Ministry director-general Yarom Ariav warned that the remarks could shake markets, threaten Israel's credit rating and speed capital flight.

Even the crypto lobby kept its distance. Nir Hirschman, chief executive of the Crypto Companies Forum, said public blockchains allow transactions to be traced and are "not a haven for hiding money," The Jerusalem Post reported. Regulators elsewhere are tightening that tracing, as the U.K.'s new guidance shows, and sanctions on oil have repeatedly moved markets this year.

For investors, the Netanyahu blockchain plan matters less as technology than as a signal that the government sees sanctions risk as real, a risk that already shows up in energy prices and regional tensions.

What's next

Netanyahu did not back down. "I hear the objections and take them into account. I thank the Bank of Israel for its advice. I listen, but I do what I think is right," he told Channel 14, Ynet said.

Watch for any formal mandate to the finance ministry or central bank and for reaction from rating agencies. The central bank's response and expert criticism are detailed in Ynet's report on the Netanyahu blockchain plan.