Blockchain has become an issue in this week’s Israeli elections after Prime Minister Benjamin Netanyahu said on Friday that the country may turn to cryptocurrency to avoid the strain on the economy from any potential international financial sanctions.
He told a local television interview that Israel is exploring the use of blockchain technology and cryptocurrencies to circumvent potential banking sanctions.
“Blockchain is an alternative to sanctions,” the prime minister said in an interview with Israel’s Channel 10 Economic Network on Friday.
Its designation of blockchain as a “national strategic tool” signals a pivot in the government’s stance on the digital currency industry, from an investment event to part of the country’s economic defense strategy. Reported CryptoJungle, Israel’s largest crypto media platform.
A dozen Western countries have announced restrictions on targeting goods from Israeli settlements in the West Bank in response to attacks by Jewish settlers on Palestinians and an increase in settlement construction approved by Netanyahu’s right-wing government. Those sanctions could extend to Israel, economists and industry figures told The Times of Israel last month.
Several candidates seeking to replace Netanyahu in the Oct. 27 election, as well as the head of the Bank of Israel, were quick to challenge the prime minister’s statement.
“The vision of BBCoin is a threat to national security,” Gadi Eisenkot, leader of the Yashar party, wrote in X on Saturday morning. PostBank of Israel in one using a play on Netanyahu’s nickname statement Netanyahu rejected the proposal, saying cryptocurrencies “cannot be used as a way to bypass sanctions.”
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Violent reaction on the streets and in the media
At Saturday evening’s anti-government rally in Tel Aviv, several onlookers pondered Netanyahu’s blockchain statement.
“An economy that runs on the dark web does not make us better than our enemies,” said Aria Cohen, holding a sign in English that read “Enough Baby’s BS.”
Media critics also criticized the idea of using crypto to circumvent sanctions.
“The crypto factor deserves particular scrutiny. Digital currencies can indeed transfer value outside of some traditional banking channels,” Yediot Ahronot columnist Nadav Eyal wrote in X Post. “But they are not a substitute for a national financial system. They do not provide credit lines to banks, they do not replace international capital markets, and they do not induce foreign companies to violate sanctions that prevent them from doing business with Israel.”
“Crypto and blockchain-based solutions are not a tool to bypass sanctions,” CryptoJungle founder Ben Simocha told Cointelegraph on Sunday. “As the U.S. Treasury demonstrated against Iran, blockchain investigations allow tracking illicit funds, blocking their fiat gateways, and even freezing them.” He said that the Israeli economy is not able to bypass the restrictions using crypto.
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