Israeli Prime Minister Benjamin Netanyahu said in a television interview that he has requested a plan using cryptocurrency and blockchain technology to help Israel bypass potential banking sanctions.
Netanyahu made the comments on Israel's Channel 10 ahead of the country's national election, expressing concern about the future of U.S. military support. He stated that American defense aid will eventually end and that Israel must "prepare for a rainy day" beyond the current administration. The existing U.S. military aid agreement provides $3.8 billion annually and expires in September 2028.
"There could be sanctions, including banking sanctions," Netanyahu said. "You have to prepare an alternative economy and think about currencies that can get around those restrictions. I am working on that as well."
When asked specifically about blockchain as a solution, Netanyahu confirmed he had already requested a plan be prepared. He did not provide details about who is developing the strategy, which currency or network it would use, or when it would be completed.
International Precedent
Several countries have attempted similar approaches. Venezuela has used Tether and Bitcoin to support its oil industry and created the Petro cryptocurrency to move transactions outside the SWIFT system. Russia deployed A7A5, a ruble-pegged token from a payments firm co-owned by a sanctioned state bank, which moved approximately $102 billion in its first year before sanctions and security issues reduced its daily trading volume by 96%.
Meanwhile, Israel's largest bank, Bank Leumi, plans to offer Bitcoin trading in early 2027 through Galaxy Digital, pending Bank of Israel approval.
Challenges and Limitations
Cryptocurrency offers limited protection from sanctions because blockchains are public and traceable. In July, Israel's Defense Ministry sanctioned 37 crypto wallets holding more than 24 million shekels that it identified as belonging to Iran's Revolutionary Guards and intended to fund Hezbollah.
Major stablecoin operators can also freeze assets. Tether, which manages the dollar-pegged USDT, froze $344 million in April in coordination with U.S. authorities and froze $131 million in July from wallets linked to Iran's central bank and armed forces following U.S. sanctions.
Broader Context
Banking sanctions prevent foreign banks from processing payments for a country's financial institutions, making it difficult for importers to pay suppliers and ultimately increasing consumer prices.
More than 60 Israeli economists and former officials recently warned that measures targeting West Bank settlements could expand to the broader economy and raise the cost of living. The United Kingdom banned imports from Israeli settlements in September, and eleven other countries, including France and Canada, have announced intentions to restrict settlement goods trade.
