Netanyahu Eyes Blockchain As Banking Risks Grow

Benyamin Netanyahu asked his advisors to prepare a blockchain-based plan to reduce Israel’s vulnerability to potential banking sanctions. However, the Prime Minister did not specify the cryptos considered, the project leaders, or the timeline.

Netanyahu requests a blockchain-based solution

The Israeli Prime Minister mentioned this project on October 23 during an interview with the economic channel Channel 10. He believes Israel must prepare alternative financial circuits in case international restrictions affect its banking system.

When journalist Roy Katz asked if blockchain could be a solution, Benyamin Netanyahu responded:

Certainly, it is one of them. I have already asked for a plan to be prepared.

This statement confirms a request but not the adoption of an operational system. Several essential elements remain unknown :

• The administration responsible for preparing the plan has not been publicly designated ;
• No blockchain has been selected ;
• Netanyahu mentioned no specific cryptocurrency ;
• No budget or timeline has been announced ;
• The project has not yet received a public legal framework ;
• No financial or technological partner has been introduced.

“One must understand that there could be sanctions, including banking sanctions,” the Prime Minister said. He added that Israel must “prepare an economy capable of circumventing them.”

His remarks were made four days before the Israeli legislative elections. They also occur amid increasing international pressure related to Israeli military operations, the situation in Gaza, and the expansion of settlements in the West Bank.

The United Kingdom and eleven other Western countries have notably announced measures against products originating from Israeli settlements. These targeted restrictions do not yet correspond to the general banking sanctions mentioned by Netanyahu.

Cryptos do not make a country invisible

A public blockchain can allow direct transfers without going through the traditional banking network. Two actors can exchange bitcoin or another digital asset as long as they have network access and control their private keys.

This autonomy remains limited when a state wants to import goods, pay companies, or convert large amounts into national currencies. Exchange platforms, partner banks, and stablecoin issuers apply compliance rules and can block certain addresses.

Transactions carried out on Bitcoin, Ethereum, or other public networks are also permanently recorded. Specialized companies can track movements, link addresses to entities, and alert platforms when funds come from a sanctioned actor.

Stablecoins pose another difficulty. Most rely on centralized companies that hold banking reserves. Their issuers can freeze tokens or refuse transactions to comply with a court order or international sanction.

A private infrastructure controlled by Israel would offer greater control but would need foreign partners for international exchanges. A national blockchain thus does not automatically create providers, liquidity, or counterparties ready to ignore restrictions.

A senior Israeli economic official, quoted anonymously by Channel 12, challenged the project. “This idea will certainly not meet its goal. Simply talking about it could harm the economy,” he said.

Israel also wants to reduce its military dependence

The blockchain project is part of a broader strategy of autonomy. Netanyahu also asked the country to prepare for a reduction, then a possible end, of U.S. military aid.

“It is only a matter of time,” he said about this assistance. The Prime Minister wants to strengthen national production of ammunition and military equipment. He mentioned an additional 400 billion shekels, or about 129 billion dollars, allocated to defense over the coming years.

Netanyahu also believes Israel might face a less favorable American political environment after Donald Trump’s departure. His opponents accuse him, on the contrary, of having worsened the country’s diplomatic isolation due to his government’s choices.

The blockchain plan thus remains a political intention, not a system already designed. Its effectiveness will depend on its technical form, chosen assets, and cooperation from foreign companies. It will also be necessary to determine whether it aims at continuity of legitimate payments during a crisis or the direct circumvention of international sanctions.

As long as no official document specifies these elements, it would be excessive to present Israel as ready to replace its banking system with cryptos. The announcement mainly shows that the government is studying alternative solutions in response to a financial risk it now considers credible.