Netanyahu Orders Plan to Use Blockchain Against Potential Banking Sanctions

Israeli Prime Minister Benjamin Netanyahu said he has asked for a plan to use cryptocurrency and blockchain networks to help Israel circumvent potential banking sanctions, speaking on Israel's Channel 10 four days before the country's national election on October 27.

"There could be sanctions, including banking sanctions," Netanyahu said in the interview, conducted by broadcaster Roy Katz. "You have to prepare an alternative economy and think about currencies that can get around those restrictions. I am working on that as well."

Asked directly whether blockchain could serve as a workaround, Netanyahu confirmed the request. "Blockchain is one of the alternatives, certainly," he said. "I have already asked for a plan to be prepared for that."

What the prime minister did not say

Netanyahu did not identify who is drafting the plan, which currency or network it would use, or when it would be delivered. The announcement, in other words, is a request for a feasibility study rather than a policy; no timeline exists. If approved, Israel would join a short list of states — Venezuela, Iran, Russia and North Korea — that have used crypto to move funds beyond the reach of U.S. financial enforcement.

The precedent is not encouraging. Blockchain analytics firm Elliptic reports that A7A5, a ruble-pegged stablecoin issued by a payments firm co-owned by a sanctioned Russian state bank, moved roughly $102 billion in its first year before sanctions and a hack of its main exchange cut its daily volume by 96 percent from peak. Venezuela built an entire legal framework around its Petro token and leaned on Tether and Bitcoin to sustain oil sales, with limited structural effect.

Takeaway: every state that has tried this route has seen volume collapse once enforcement caught up.

Why Israel is hedging

Netanyahu told Israelis that U.S. military funding — currently $3.8 billion per year under a deal expiring in September 2028 — will not last. "It is only a question of time," he said, urging the public to accept an end to "tens of billions of dollars in American assistance" for the defense budget.

He framed the crypto plan within a broader push for self-sufficiency. "We must prepare for a rainy day," Netanyahu said. "I want independence in weapons production, just as I wanted energy independence." Asked about a post-Trump world, he said there "may never be another" president as friendly to Israel, and named India's Prime Minister Narendra Modi as a partner already discussing production cooperation.

Sanctions pressure is not hypothetical. The U.K. banned imports from Israeli settlements in early September and sanctioned individuals and companies involved in settlement construction. Eleven other countries, including France and Canada, have said they intend to restrict trade in settlement goods. More than 60 Israeli economists and former officials warned this week, per Ynet, that measures targeting West Bank settlements could spread to the wider economy and raise living costs.

The legal backdrop is heavier still. A UN commission of inquiry concluded in September 2025 that Israel is committing genocide in Gaza, and the International Criminal Court issued arrest warrants for Netanyahu and former defense minister Yoav Gallant in November 2024 over alleged war crimes. Netanyahu has said Israel will not recognize the ICC warrants.

Can crypto actually dodge sanctions?

Public blockchains are traceable, and Israel's own enforcement record proves the point. On July 1, Defense Minister Israel Katz signed sanctions orders against 37 crypto wallets holding more than 24 million shekels that Israel attributes to Iran's Revolutionary Guards, allegedly intended to fund Hezbollah. The head of the ministry's counter-terror financing bureau said there is "no immunity for terror financiers even in the crypto sphere."

Centralized issuers retain kill switches. Tether froze $344 million in April working with U.S. authorities, and another $131 million in July across wallets tied to Iran's central bank and armed forces after U.S. sanctions. Any Israeli plan built on dollar-pegged tokens would face the same single point of failure.

Domestic market structure offers one partial hedge. Bank Leumi, Israel's largest bank, plans to offer Bitcoin trading in early 2027 through Galaxy Digital, pending Bank of Israel approval.

Takeaway: a sanctions-evasion architecture on traceable, freezable rails has never survived sustained enforcement, and no plan has yet been written.

Whatever plan emerges will contend with a hard calendar: Israelis vote on October 27, and the U.S. aid agreement expires in September 2028, just before the next American presidential election.