Bank of Israel rejects Netanyahu's crypto sanctions bypass plan

Central Bank Rejects Crypto Contingency Plan

The Bank of Israel on Saturday rejected Prime Minister Benjamin Netanyahu's proposal to use cryptocurrencies as a mechanism for circumventing potential economic sanctions, stating that digital assets cannot serve as an alternative to traditional financial relationships. The central bank's response followed Netanyahu's interview with an Israeli business channel on Friday, during which he disclosed that he had ordered officials to prepare contingency plans involving cryptocurrencies in anticipation of possible banking restrictions.

"Cryptocurrencies cannot be used as a route for bypassing sanctions," the bank said in a statement carried by the public broadcaster, adding that "the right thing for Israel's economy is preserving the economic relationships with our principal trade partners." The institution stressed that preventing sanctions and limiting their negative impact fell within the political leadership's responsibilities, urging the government to focus on maintaining international trade ties rather than seeking technological shortcuts.

Opposition Warns of Capital Flight Risk

Opposition leader Yair Lapid seized on Netanyahu's remarks to attack the prime minister's economic competence ahead of Tuesday's Knesset elections. "Netanyahu's statement is insane, but it is true: If his government is elected, security assistance will stop and severe economic sanctions will be imposed on Israel," Lapid said. Former Prime Minister's Office chief Yoav Horowitz, now a co-founder of the opposition Yashar party, warned that the premier's comments alone could trigger immediate financial consequences.

Horowitz told the public broadcaster that reactions to Netanyahu's remarks would become apparent Sunday and Monday, predicting that "we will see entities withdrawing their money from here." He accused Netanyahu of preparing for failure rather than prevention, stating that "instead of telling us how he will prevent sanctions and ensure they are not imposed, he explains what should be done when sanctions are imposed." Horowitz added that "Netanyahu, Ben-Gvir and Smotrich equal sanctions," referring to National Security Minister Itamar Ben-Gvir and Finance Minister Bezalel Smotrich.

European Sanctions Debate Intensifies

Netanyahu had also cautioned during his television appearance that US aid to Israel could cease and Washington's position toward the Jewish state could shift once President Donald Trump leaves office. The prime minister's warnings come amid intensifying European calls for punitive measures against Israel over its war on the Gaza Strip and illegal settlement activity in the occupied West Bank.

EU foreign ministers agreed in May 2026 to impose sanctions targeting violent Israeli occupiers and organizations supporting settlement activities, though the 27-member bloc remains divided regarding broader economic measures. In September 2025, the European Commission proposed suspending some trade preferences granted to Israel under the bilateral Association Agreement alongside sanctions against extremist ministers, while also freezing bilateral support except for civil society assistance and the Yad Vashem Holocaust memorial center.