11-03-2026 
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TL;DR: Facing growing Western sanctions, Israeli Prime Minister Benjamin Netanyahu has asked advisers to devise a plan that uses cryptocurrency and blockchain to bypass possible future banking sanctions. The Bank of Israel, 109 economists and officials, and political opponents have pushed back, warning it would deepen Israel’s isolation and harm its economy. Critics also note that crypto is traceable, even as Russia, Iran, North Korea, and Venezuela have used it to get around sanctions.
Key Takeaways:
- Netanyahu expects banking sanctions to follow asset freezes and visa bans, and has told advisers to plan for crypto-based workarounds.
- The Bank of Israel opposed Netanyahu’s idea, saying it would strain ties with trade partners and that the focus should be on preventing sanctions.
- Blockchain transactions are traceable, and authorities can identify and block sanctioned wallets, contrary to the “anonymous” myth.
The economic pressure to Israel brought by sanctions imposed by Western countries has prompted Israeli Prime Minister Benjamin Netanyahu to rethink the possibility of using cryptocurrencies to circumvent these punishments, a view that the Bank of Israel expressly opposed.
Israel’s military actions and policies in Gaza, the West Bank, and Lebanon have strained its bilateral and diplomatic relations with its allies, including the United Kingdom, France, and Canada, forcing the country to near isolation.
Despite the mounting pressure, Israel demonstrated resiliency and has so far managed to salvage its economy, with its gross domestic product (GDP) even growing 2.9% in 2025 and projected to increase to 4% in 2026 and 5.5% in 2027.
While Israel’s economy fares better than what is to be expected during major regional conflicts, there’s no guarantee that the nation could maintain this upward trajectory, especially as more countries impose sanctions and trade restrictions to pressure Jerusalem to align with international law.
As of October 2026, there are 139 sanctions, restrictions, and diplomatic measures against Israel—of which 94 were said to be active—documented across 64 countries, according to data compiled by the Jewish People Policy Institute (JPPI).
Although Israel continues to thrive, the presence of these punitive measures have created friction and long-term risk to its economy, which can prove fatal if left unattended.
Bracing for the next blow
As head of the Israeli government for nearly 19 years since 1996, Netanyahu’s political expertise has equipped him to foresee the threats that come with growing international pressure. After asset freezes and visa bans, the premier anticipates banking sanctions to come next for Israel.
“We need to prepare ways to evade banking sanctions through an alternative economic system,” the prime minister said, as quoted by Al Jazeera. “You know what that means – the currencies that can bypass them.”
While most countries are exploring blockchain technology to streamline government operations, eradicate corruption, provide citizens new payment options, and improve documentation, among others, Netanyahu floats it as an ideal tool for its contingency plan in circumventing future banking sanctions.
The prime minister said he has instructed his advisers to develop a plan to utilize cryptocurrencies and leverage their underlying blockchain technology to evade international sanctions and maintain Israel’s financial prowess.
But the central bank was quick to slam the proposal last Saturday, arguing that using cryptocurrencies to deal with sanctions would further strain what was left of its ties with trade partners and other countries.
“The right thing for Israel’s economy is preserving the economic relationships with our principal trade partners and focusing on preventing sanctions and their negative influence on the economy,” the Bank of Israel said. “This issue is within the responsibilities of the political echelon, and it should act to advance it.”
Over 100 economists, entrepreneurs, Nobel laureates, and government officials have shared the same sentiment with the central bank in a position paper released following the premier’s statement on October 23.
“We express deep anxiety and concern over Prime Minister Benjamin Netanyahu’s remarks about the possibility of international sanctions being imposed on the Israeli banking system, and his strange suggestion to prepare for the use of cryptocurrencies in order to circumvent them,” said the 109 signatories of the document.
“Netanyahu is knowingly steering the State of Israel toward an international boycott and economic isolation, and all he has to offer the Israeli economy is a bizarre solution typically found in criminal organizations that which will be of absolutely no use,” they added, while noting that creating the crypto-based economy would further complicate Israelis’ ability to conduct transactions and meet their daily needs, and potentially accelerating the departure of foreign workers from the country.
Political opposition leader Gadi Eisenkot, who investors see as key to help Israel revive its tainted reputation, claimed Netanyahu “has lost touch with reality,” arguing that implementing the “BibiCoin” vision would not only lead to the collapse of the economy but also the national security, The Times of Israel reported.
The term “BibiCoin” is a play on words that combines the prime minister’s name and Bitcoin.
Following the backlash, Netanyahu said he will take into consideration the Bank of Israel’s advice, but noted that he was only doing what he thinks is best for the country.
Crypto’s reputation caught in the crossfire
While developers work to distance cryptocurrencies from their association with criminal activity, Netanyahu’s recent remarks have further complicated these efforts.
The common misconception about cryptocurrencies is that they are anonymous and untraceable—a notion that is often carried by the world’s most isolated regimes.
“The crypto industry isn’t a secret system that lets you vanish under the radar. Transactions on blockchain networks are traceable, and even today, countries and authorities know how to identify and block activity in digital wallets of entities under sanctions,” explained Avigdor Liberman, chairman of the Israeli political party Yisrael Beytenu.
Before Netanyahu’s remarks, Russia had been making headlines in recent years for trying to bypass international sanctions using cryptocurrencies. These efforts intensified in early 2025 with the launch of the A7A5 stablecoin, which reportedly processed more than $93.3 billion in transactions in less than a year.
In its 2026 Crypto Crime Report, analytics firm TRM Labs stated that around $72 billion in illicit cryptocurrency flows were linked to A7A5 stablecoin, underscoring concerns about its potential role in circumventing financial restrictions, Ynet Global reported.
Israel’s geopolitical rival, Iran, has also increasingly relied on cryptocurrency to navigate sanctions, with addresses linked to the Islamic Revolutionary Guard Corps (IRGC) accounting for more than half of the value received by Iranian crypto services by the end of 2025.
On the other side of the globe, North Korea and Venezuela emerged as examples of how digital assets can serve different purposes under international sanctions, with North Korean hackers using cyberattacks to obtain funds and Venezuela turning to stablecoins to facilitate oil payments.
In 2025, North Korea-linked thefts exceeded $2 billion, while Venezuela’s state oil firm PDVSA adopted USDT transactions to limit exposure to potential freezes on overseas funds.
Cases such as these only prove that cryptocurrencies continue to operate in the shadows of illicit activity, raising questions about whether efforts to regulate digital assets can keep pace with their use in sanctions evasion, money laundering, and other financial crimes.
FAQs:
Why is Netanyahu considering crypto?
He wants a contingency plan to evade potential banking sanctions as international pressure on Israel grows.
Is Israel’s economy currently struggling?
No. GDP grew 2.9% in 2025 and is projected to grow 4% in 2026 and 5.5% in 2027, though sanctions pose long-term risk.
How many measures are there against Israel?
As of October 2026, the JPPI counts 139 sanctions, restrictions, and diplomatic measures across 64 countries, with 94 said to be active.
Can crypto really be used to evade sanctions?
Some countries have tried, but transactions are traceable and wallets can be blocked, so critics say it is of little use.
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