# Bank of Israel rejects Netanyahu's proposal to prepare crypto routes around possible sanctions

Netanyahu answered that he listens to the central bank but will do what he thinks best, and opposition leader Gadi Eisenkot accused him of "dismantling the Israeli economy."

- Published: 2026-10-25T05:49:12.746Z
- Canonical: https://polylog.news/crypto/2026-10-25/bank-of-israel-rejects-netanyahu-s-proposal-to-prepare-crypt
- Publisher: Polylog (Crypto desk)
- Section: geopolitics
- Sources: [Polylog editors](https://polylog.news), [Times of Israel](https://www.timesofisrael.com/bank-of-israel-opposition-heads-pan-pms-proposal-to-use-crypto-to-evade-sanctions/amp/), [Times of Israel (liveblog)](https://www.timesofisrael.com/liveblog_entry/netanyahu-says-hell-consider-bois-criticism-of-his-crypto-sanctions-plan-but-will-do-what-he-thinks-best/), [Ynetnews](https://www.ynetnews.com/business/article/byqyxv93gl), [Euronews Arabic](https://arabic.euronews.com/2026/07/01/israel-imposes-sanctions-digital-wallets-accused-of-financing-hezbollah-and-irans-allies)

Israeli Prime Minister Benjamin Netanyahu said in an interview that the international community could impose banking sanctions on Israel, and that the country should prepare its economy to get around such sanctions using crypto, [the Times of Israel reported](https://www.timesofisrael.com/bank-of-israel-opposition-heads-pan-pms-proposal-to-use-crypto-to-evade-sanctions/amp/). The Bank of Israel publicly rejected the idea. It said cryptocurrencies ["cannot be used as a route for bypassing sanctions"](https://www.ynetnews.com/business/article/byqyxv93gl) and that the right course for the economy is to preserve relationships with its main trade partners and to focus on preventing sanctions.

Netanyahu did not withdraw the proposal. "I thank the Bank of Israel for the advice, I listen, but I do what I think [is best]," [he said](https://www.timesofisrael.com/liveblog_entry/netanyahu-says-hell-consider-bois-criticism-of-his-crypto-sanctions-plan-but-will-do-what-he-thinks-best/), [according to Cointelegraph's summary](https://t.me/cointelegraph/72835) of the exchange. Gadi Eisenkot, who leads an opposition party, accused him of "dismantling the Israeli economy."

The exchange matters for two reasons. First, a sitting prime minister has openly raised the prospect of banking sanctions against Israel, a risk that Israeli officials have usually not discussed in public. Second, Israel's own record undercuts the plan's mechanics. In July, Defense Minister Israel Katz announced [sanctions on 37 crypto wallets that Israel says belong to Iran's Islamic Revolutionary Guard Corps](https://arabic.euronews.com/2026/07/01/israel-imposes-sanctions-digital-wallets-accused-of-financing-hezbollah-and-irans-allies), and Israeli agencies have repeatedly seized wallets they link to Hamas and Iran. The state that Netanyahu proposes to shield has shown how traceable public ledgers are.

Sanctions evasion at the scale of a national economy needs dollar liquidity and off-ramps. The largest dollar stablecoins, Tether's USDT and Circle's USDC, can be frozen at the address level by their issuers. A country whose main trade partners are western would gain little from switching to rails that those same partners can monitor and block.

## What this means

The new information is that Israel's prime minister now treats western banking sanctions as a scenario to prepare for. That raises the political risk premium on Israeli banks' correspondent relationships, on the shekel, and on Israeli-domiciled holdings for internationally mobile investors, whether or not any crypto plan follows. The central bank controls bank supervision and the reserve system, and its public refusal shows that it will not build the plan. Netanyahu benefits from a signal of defiance aimed at voters at home. The Bank of Israel benefits from reassuring foreign counterparties. The common framing treats crypto as a sanctions escape. Russia's experience points the other way: the exchange Garantex was shut down and the ruble stablecoin A7A5 was sanctioned once they became material channels. The desk's read is that no operational crypto-sanctions program emerges within months, because the institutions that would have to run it oppose it. The lasting effect is that capital holders price Israel's banking-access risk higher. The read would be wrong if the government ordered regulators to license shekel stablecoins or exchanges with a stated sanctions-resilience purpose, or if a major trade partner formally moved toward financial restrictions on Israeli banks.

## What to watch

- Whether the cabinet or the Finance Ministry issues any directive on crypto or stablecoin licensing, which would show whether Netanyahu's statement becomes policy or stays rhetoric.
- Statements from European governments about financial measures against Israel, because those are the sanctions Netanyahu says he is preparing for.
- Whether Israeli banks or exchanges report clients moving funds abroad or into crypto, which would show residents pricing the risk that the prime minister described.