Bank of Israel Pushes Back on Netanyahu's Plan to Use Crypto Against Sanctions

By Kevin · 2026-10-26 · News

Oct. 26 (CandyPulse) — Can crypto shield a country's banks from sanctions? Israel's central bank says no. The Bank of Israel has publicly rejected an idea floated by Prime Minister Benjamin Netanyahu to use cryptocurrency as a way around possible international sanctions. A central bank openly contradicting the prime minister is a rare sight.

Key takeaways

Netanyahu said in a TV interview that he had asked advisers to develop a crypto-based plan in case Israeli banks face sanctions
On Oct. 24, the Bank of Israel rejected the idea, saying digital assets can't replace traditional financial relationships
The central bank did not announce any new crypto policy or change to its oversight
Netanyahu said he would take the criticism into account but keep his own judgment
More than 100 economists and opposition figures criticised the proposal ahead of the Oct. 27 election

What each side said

Who	Position
Netanyahu	Asked advisers for a crypto plan in case banks face sanctions; no design or timeline given
Bank of Israel	Digital assets can't substitute for traditional banking relationships
Opposition (Gadi Eisenkot)	Called the plan "madness"
100+ economists	Warned sanctions risks could hurt investment, jobs and Israel's economic standing

Why the central bank pushed back

Banks don't just hold money. They connect a country to the global system for trade, payments and investment, through correspondent banks, card networks and international settlement. Crypto can move value across borders, but it can't recreate those relationships, especially when regulated exchanges and stablecoin issuers must follow sanctions rules themselves. Tether, for example, regularly freezes tokens linked to sanctioned addresses.

Why it matters

The episode shows a wider truth: crypto is now part of national policy debates, but central banks remain cautious about treating it as a replacement for the traditional system. Related reading: Japan adds Garantex to its sanctions list and the Fed's proposed stablecoin rules.

What's next

With the election on Oct. 27, watch whether the proposal goes any further. More on our Regulation page.

Disclaimer: This article is for information only and is not financial advice. Crypto assets are volatile and can lose value. Always do your own research before making any investment decision.