Netanyahu Floats Crypto as Shield Against Sanctions, Drawing Rebuke From Central Bank

Prime Minister Benjamin Netanyahu has said Israel should be ready to use cryptocurrency to get around possible economic sanctions, a proposal that has drawn sharp criticism from the country's central bank, opposition politicians and more than 100 experts. The remarks came just two days before Israel's general elections.

In an interview with Israel's Channel 10 on Friday, Netanyahu said the country needs to "prepare ways to evade banking sanctions through an alternative economic system." Asked to clarify, the prime minister indicated that blockchain-based digital currencies were what they had in mind as a way to bypass restrictions that could cut Israel off from the international financial system.

The comments follow growing international pressure on Israel over the war in Gaza and the expansion of settlements in the occupied West Bank. Palestinian authorities say more than 74,500 people have been killed in Gaza since the war began three years ago. Israel has also faced accusations of war crimes in southern Lebanon, which continues to come under near-daily attacks despite a ceasefire. Netanyahu has vowed to expand settlements, which are considered illegal under international law, and has said no Palestinian state will be allowed, a stance that has drawn condemnation from European allies.

Measures targeting settlements are already advancing. Last month, at least 12 major economies, including the United Kingdom, pledged coordinated steps against settlements in the West Bank. The European Union has sanctioned individuals and groups linked to settlements, Spain and Ireland have restricted settlement goods, and the Netherlands put a broader ban on their import, purchase and sale into force in September. Israel's banking system has not yet been targeted.

Netanyahu also warned that Israel must plan to finance its own military, saying "America has changed." Financing from Washington "will end," the prime minister said, adding that it was only a matter of time and that Israel should prepare for a less favorable White House once US President Donald Trump's term ends in two years. Netanyahu also faces an International Criminal Court arrest warrant, and the International Court of Justice is hearing a genocide case against Israel brought by South Africa.

Experts note that digital assets could in theory let businesses pay overseas suppliers if banks were barred from international transfers, and sanctioned actors have used crypto for cross-border payments. Russia has reportedly done so for some transactions. But analysts say crypto cannot replace conventional banking at the scale of a modern economy. It also would not remove the core problem of financial isolation, and a payment made in crypto could still be illegal under sanctions rules. Israel's defence and technology industries also depend on foreign components and specialist equipment.

In a statement issued Sunday, more than 100 experts and former Israeli officials voiced "grave concern and anxiety" over the plan. They said Netanyahu had failed to grasp the seriousness of the threat and described the idea as a solution more commonly associated with criminal organisations. Sanctions, they warned, would cause "enormous and irreversible damage" to the economy.

The Bank of Israel also pushed back, saying cryptocurrencies "cannot be used as a route for bypassing sanctions." It said the right course was to preserve economic ties with principal trade partners and work to prevent sanctions, a task it said falls to the political leadership. Netanyahu replied that they were grateful for the advice, "But I do what I think [is best]."

Gadi Eisenkot, leader of the Yashar party and Netanyahu's main opponent, called the vision "a threat to national security" and said the prime minister had "lost touch with reality." He asked how a company such as Google could buy an Israeli firm on the condition that it bypass an international bank and pay in crypto.