The Bank of Israel has publicly rejected Prime Minister Benjamin Netanyahu’s proposal to explore cryptocurrency as a way around potential international financial sanctions, exposing a disagreement between the country’s central bank and political leadership. Summary The Bank of Israel has rejected Netanyahu’s suggestion that cryptocurrency could help Israel bypass financial sanctions. Netanyahu said he requested a blockchain contingency plan but acknowledged that cryptocurrency might never be used. The central bank urged political leaders to preserve international banking and trading relationships. Opposition politicians criticized Netanyahu’s proposal ahead of Israel’s October 27 election. No cryptocurrency-based sanctions workaround has been announced or implemented by the Israeli government. According to the Bank of Israel’s October 24 statement, as reproduced in Israeli reporting, cryptocurrencies cannot be used to bypass sanctions. The central bank urged the government to preserve economic relations with Israel’s main trading partners, while Netanyahu responded to the criticism by saying he would consider the advice but make his own decisions. JUST IN: Israel’s central bank rejects Netanyahu’s crypto proposal to bypass sanctionsThe proposal to use cryptocurrency to circumvent potential international sanctions has been rejected by the Bank of Israel. pic.twitter.com/ROJONoBAd0— crypto.news (@cryptodotnews) October 25, 2026 Bank of Israel rejects Netanyahu’s crypto sanctions proposal The disagreement began after Netanyahu discussed the possibility of international banking sanctions during an October 23 interview with Channel 10 presenter Roi Katz. Asked whether Israel could face economic isolation, Netanyahu acknowledged the risk and said the country needed contingency arrangements. “One must understand that banking sanctions could be imposed,” he said, before calling for an alternative financial system capable of operating despite such restrictions. When Katz asked whether blockchain technology formed part of the proposal, Netanyahu confirmed that he had already requested preparations involving the technology. The Bank of Israel responded the following day, rejecting the suggestion that digital currencies could adequately protect the economy from financial restrictions. “Cryptocurrencies cannot serve as a means to circumvent sanctions,” the bank said. It urged the government to preserve commercial relationships with Israel’s leading trading partners and focus on preventing restrictions before they damage the economy. The institution emphasized that managing the political relationships behind potential sanctions falls within the government’s responsibilities. The statement was an unusually public disagreement over economic policy between the central bank and a sitting prime minister. Netanyahu stands by blockchain proposal despite criticism Following the central bank’s response, Netanyahu addressed the disagreement in an October 24 interview with Channel 14. He maintained that cryptocurrency remained one possible option, although it was neither the only alternative under consideration nor certain to be adopted. “We have other means; crypto is one of them,” Netanyahu said, acknowledging that officials might ultimately decide against using digital currencies. The prime minister said he appreciated the central bank’s advice but reserved the right to make the final decision. “I listen, but I do what I think [is best],” he said. His comments did not identify a cryptocurrency, blockchain network, government agency or financial institution responsible for developing the proposed arrangements. No implementation schedule, funding commitment or operational system was disclosed. The discussion concerns preparations for possible sanctions, not an announcement that Israel has begun conducting government transactions through cryptocurrency to avoid existing restrictions. Why is Israel considering cryptocurrency amid sanctions concerns? Netanyahu’s comments followed growing international pressure over Israeli policies in the occupied West Bank. Britain and 11 other Western countries recently announced sanctions targeting goods produced in Israeli settlements, citing settlement expansion and violence involving settlers and Palestinians. Those measures differ from comprehensive sanctions against Israel’s banking system. The Bank of Israel’s response focused on the economic consequences of losing access to established financial relationships, particularly those involving major trading partners. Cryptocurrency can provide alternative payment methods, but transactions on public blockchains often leave permanent records. Companies providing exchange, custody and stablecoin services may remain subject to sanctions requirements. Recent US sanctions enforcement involving Iran illustrates the limits of treating digital assets as unrestricted international payment instruments. US authorities have targeted cryptocurrency networks accused of facilitating prohibited transactions. Tether has previously frozen tokens held in wallets linked by authorities to Iranian sanctions networks, demonstrating that some digital assets remain subject to issuer controls. Israel has meanwhile pursued regulated digital asset services within its existing financial system. The country’s largest bank partnered with Galaxy to offer cryptocurrency trading through its investment application from 2027. The country has pursued tighter stablecoin regulatory standards while the central bank examines the future of digital payments. Opposition leaders criticize Netanyahu ahead of election The dispute attracted criticism from opposition politicians ahead of Israel’s October 27 parliamentary election. Gadi Eisenkot, leader of the Yashar party, questioned how Israeli technology companies could continue receiving international payments and foreign investment if conventional banking connections deteriorated. He characterized Netanyahu’s proposed alternative as a threat to economic and national security. Former Prime Minister Naftali Bennett criticized the prospect of an economy increasingly isolated from international financial and technological relationships. Yisrael Beytenu leader Avigdor Liberman argued that blockchain transactions were traceable and that authorities could identify and restrict cryptocurrency activity linked to sanctioned entities. Liberman urged the government to prevent sanctions instead of depending on alternative payment arrangements.
