BoI slams Netanyahu's crypto plan for evading sanctions

Prime Minister Benjamin Netanyahu has proposed exploring the use of cryptocurrencies to circumvent potential international banking sanctions, ahead of a crucial national election. In an interview with Channel 10, Netanyahu stated, "You need to prepare ways to evade banking sanctions through an alternative economic system. Currencies that can bypass them." He confirmed this was in reference to cryptocurrency assets.

Netanyahu's comments have faced strong criticism from political opponents, who warned that such tactics could isolate Israel's export-dependent economy from Western financial systems. Opposition Leader Yair Lapid accused Netanyahu of adopting policies akin to those of sanctioned states such as Iran, Russia, and Venezuela, whose banks are cut off from global markets.

Lapid expressed concern that this approach could drive away Israel's young workforce and undermine the country's economic integration with the global financial system.

The proposal coincides with the final phase of campaigning for the Oct. 27 election, where Netanyahu confronts a robust challenge from the centrist opposition bloc led by former military chief Gadi Eisenkot. Meanwhile, a coalition of 12 nations, including the UK, has announced coordinated sanctions targeting entities involved in West Bank settlement expansion.

These measures aim to restrict not just individual settlers but also corporate entities, banks, and contractors providing financial, construction, or operational services to these settlements. Economists and banking experts have cautioned that if Western sanctions target Israeli domestic commercial lenders, the country could be entirely disconnected from the global SWIFT payment network and U.S. dollar clearing systems.

This potential disruption could have severe repercussions for Israel's technology sector, which heavily depends on international venture capital and foreign currency liquidity.