Benjamin Netanyahu has confirmed that his government is examining the use of cryptocurrency to secure Israel's economic flows should the country face international banking sanctions. Speaking on Channel 10, the Israeli prime minister said preparations were underway for an alternative to the conventional banking system.
"We must prepare ways to circumvent bank sanctions through an alternative economic system," Netanyahu said. Pressed further on the approach, he added simply: "Quite right."
The remarks come as twelve states, led by the United Kingdom, coordinate sanctions targeting settlement activity in the West Bank. Officials and economists in Israel have warned that such measures could cost the country its correspondent banking relationships abroad, a development that would directly damage Israeli foreign trade by cutting off access to the international payment rails that routine commerce depends on.
A warning from the central bank
The suggestion that crypto could substitute for that lost access has drawn immediate pushback from within Israel's financial establishment. Yair Avidan, the former head of banking supervision at the Bank of Israel, described the prospect in stark terms, calling it an "existential danger."
Opposition leader Yair Lapid has also criticised the plan, placing him alongside central bank figures in opposing a strategy that would see the state lean on digital assets to route around sanctions pressure rather than negotiate a resolution to the underlying dispute.
A European precedent
The debate in Jerusalem echoes a pattern European regulators have watched develop over several years in Russia. According to analysis from Chainalysis, Russia has systematically used crypto exchanges and stablecoins to evade Western trade restrictions since sanctions were first imposed, with experts estimating that roughly $350 billion in volume has been funnelled past those restrictions through such channels. Chainalysis identifies Russia, alongside Iran and North Korea, as the principal state actors using crypto infrastructure to blunt the effect of sanctions regimes.
For European policymakers, an Israeli government openly discussing a comparable strategy raises questions that go beyond Middle East diplomacy. Sanctions enforcement across the EU and UK increasingly assumes that crypto rails offer a potential bypass route, and a G7-aligned state considering the same playbook as Moscow would test how robust that enforcement architecture actually is.
Netanyahu did not detail what form the alternative system would take, nor which digital assets or infrastructure might be involved. The Bank of Israel has not issued a formal response beyond Avidan's comments, and it remains unclear whether the plan has moved beyond preliminary discussion.
