Prime Minister Benjamin Netanyahu’s proposal to prepare cryptocurrency and blockchain options against possible international financial sanctions has triggered a rare rebuke from the Bank of Israel, days before Israel’s election. Netanyahu raised the idea in a Friday interview with Channel 10, saying Israel should prepare an alternative economy in case banking sanctions were imposed.
When asked whether cryptocurrency could provide such an alternative, Netanyahu agreed and said blockchain was another possibility. He said he had asked advisers to prepare a plan, but officials in Israel’s economic ministries and senior figures in the Prime Minister’s Office said they were unaware of any team working on it.
The comments followed sanctions announced by Britain, France, Canada and other Western countries targeting imports from Israeli settlements in the West Bank. Those measures were linked to settler violence and settlement expansion, while economists and industry figures warned that wider economic effects could reach Israel proper.
The Bank of Israel said cryptocurrencies could not serve as a way to bypass sanctions and urged the political leadership to preserve economic ties with major trading partners instead. Yair Avidan, a former Bank of Israel banking supervisor, said moving transactions onto a blockchain would not override legal restrictions or remove the need for compliant banks, payment providers and trading partners.
The proposal also became a campaign flashpoint. Gadi Eisenkot, Netanyahu’s main rival, called the idea “madness” and warned that a so-called “BibiCoin” policy could drive companies abroad and harm national security, while opposition leader Yair Lapid accused Netanyahu of leading Israel toward economic isolation.
More than 100 economists, including former Bank of Israel officials, former central bank governor Jacob Frenkel and several Nobel laureates, signed a letter warning that the proposal could reduce foreign investment, increase unemployment and damage Israel’s economic standing. Crypto industry representatives also said public blockchain networks leave transactions traceable and cannot guarantee that foreign businesses, banks or investors will continue dealing with Israel.
Netanyahu continued defending the proposal and separately warned that American military aid could eventually end. The immediate dispute therefore centers on whether digital assets could offer a limited payment channel or whether sanctions would still block the banking relationships, commercial access and international cooperation Israel’s economy depends on.