Netanyahu faces backlash over plan to use crypto to bypass sanctions

Bank of Israel rejects crypto bypass proposal

The Bank of Israel officially rejected the Prime Minister’s proposal to use cryptocurrency to evade economic measures. The central bank stated that digital currencies "cannot be used as a route for bypassing sanctions".

The institution dismissed the feasibility of using these assets to replace traditional banking systems for international transactions. This formal rejection of the plan followed the Prime Minister's public comments on the matter.

Political opposition labels plan a national security threat

Several candidates running in the October 27 elections joined the Bank of Israel in challenging the Prime Minister’s proposal. Yashar party leader Gadi Eisenkot wrote on X that the vision of a so-called BibiCoin is a threat to national security.

Opposition leader Yair Lapid accused the Prime Minister of admitting that another term would end American military assistance. He warned that subsequent sanctions would devastate the economy, cause prices to soar, and result in irreparable damage.

Lapid argued that a change of government could preserve support from the United States and avert international sanctions. The Prime Minister had previously warned that American military assistance would eventually end.

Democrats leader Yair Golan called the interview a detached and hysterical performance. He stated that the man has lost it and argued that preventing sanctions requires confronting Jewish terrorism and protecting strategic alliances.

Economic experts question technical viability of crypto strategy

Nadav Eyal, a columnist for Yediot Ahronot, wrote on X that digital currencies cannot replace a national financial system. He noted that these assets do not provide credit lines to banks, replace international capital markets, or persuade foreign companies to violate sanctions.

Ben Samocha, founder of CryptoJungle, told Cointelegraph on Sunday that blockchain solutions are not a tool for bypassing sanctions. He cited United States Treasury actions against Iran and noted that blockchain investigation can track illicit funds to freeze them.

Samocha added that the Israeli economy is not currently fit to bypass sanctions using cryptocurrency. Avishai Ovadia, a founding partner at the investment firm Collider, said the advice the Prime Minister received is wrong and misleading.

Ovadia argued that public transaction records and the intermediaries required to convert digital assets into conventional money make cryptocurrency a poor means of evading scrutiny.

Public and media backlash describes plan as delusional

The proposal has sparked alarm, with i24NEWS reporting on October 24 that critics described the plan as “jaw-droppingly delusional”. CTech reported the same day that the plan is considered “highly dangerous for Israel” amid fierce backlash. Personal finance blogger HaSolidit also called the proposal “jaw-droppingly delusional” and questioned the potential reaction of the stock market.

Financial journalist Shlomo Teitelbaum questioned the vision behind the proposal, asking “Crypto instead of diplomatic agreements? Bitcoin instead of the Foreign Ministry? Where has his good English gone?”. Former IDF spokesman Avi Benayahu exclaimed “Oh my God, listen twice” before listing his concerns regarding the end of American aid, economic sanctions, and a shift to a crypto economy. Benayahu also expressed concern for the Bank of Israel governor, the Tel Aviv Stock Exchange, and the exchange rate.

Journalist Attila Somfalvi said “I can’t calm down: Netanyahu is actually finishing Israel off. Leading us toward another disaster. This is insane. Frightening.”. Somfalvi also questioned whether voters wanted Netanyahu to continue leading the country.

At an anti-government rally in Tel Aviv on Saturday, demonstrator Aryeh Cohen held a sign reading “enough Bibi’s B.S.” and said “An economy that runs on the dark web makes us no better than our enemies”. Another attendee, Pnina, asked “what’s next, the Bank of Israel living ‘neath the law”.

Netanyahu frames blockchain as national strategic tool

Netanyahu described blockchain as a “national strategic tool” on October 25. CryptoJungle, Israel’s largest crypto media platform, reported that this labeling signals a pivot from viewing the digital-currency industry as an investment event to treating it as part of the country’s economic defense strategy.

Western sanctions target West Bank settlements

A dozen Western countries have announced sanctions targeting goods from Israeli settlements in the West Bank. These measures follow reports of Jewish settler attacks on Palestinians and an increase in settlement construction approved by Netanyahu’s right-wing government. Economists and industry figures told The Times of Israel that these sanctions could extend into Israel proper.