Israeli Prime Minister Benjamin Netanyahu said on television that he has asked for a plan to use blockchain in case sanctions hit Israeli banks. The interview aired on Channel 10 four days before the October 27 parliamentary election. Nobody has seen the plan itself, but a remark from the head of government of a country with a developed banking sector is already being discussed across the crypto market.
What exactly did Netanyahu say?
The conversation started with American aid. In the prime minister's words, an end to it is "only a question of time", and Israelis should get used to life without tens of billions of dollars from the US for defense. The current deal gives $3.8 billion a year and runs until September 2028.
He spoke about sanctions bluntly. Banking ones are possible too, he said, so an alternative economy has to be prepared, along with currencies that could get around the restrictions. Blockchain is far from the only item on that list, but it was the first one he named.
"Blockchain is one of the alternatives, certainly. I have already asked for a plan to be prepared for that."
- Benjamin Netanyahu, Prime Minister of Israel, from an interview with Channel 10
Who is drafting the document, which currency or network it considers and when it will be ready, the prime minister did not say. He only added that he wants independence in weapons production, just as he once wanted energy independence. "We must prepare for a rainy day," he concluded.
Why are bank sanctions dangerous and where does blockchain fit?
To follow the logic, start with the consequences. Banking sanctions mean foreign banks refuse to process payments for a country's banks. Importers struggle to pay suppliers, and in the end shoppers feel it at the supermarket as prices go up.
In this scheme, crypto plays the role of a spare channel. Here is what it offers in practice:
- Payment without an intermediary bank: a blockchain transfer needs no correspondent account, so one foreign bank's decision cannot stop it.
- A dollar-pegged stablecoin keeps a familiar unit of account and does not swing the way Bitcoin does.
- The network runs around the clock, weekends included.
- Buyers and sellers still have to turn money into tokens and back somewhere, and that is where the bottleneck appears.
Why is crypto not an easy loophole?
Blockchains are public, and every transfer is visible to everyone. Israel knows this from its own experience. On July 1, Defense Minister Israel Katz signed orders imposing sanctions on 37 crypto wallets holding more than 24 million shekels. The authorities say the money belongs to Iran's Revolutionary Guards and was meant to fund Hezbollah. The head of the ministry's relevant bureau said there is "no immunity for terror financiers even in the crypto sphere".
There is a second trap. Tether, the company that issues the USDT stablecoin, can freeze any wallet holding the token. In April it blocked $344 million together with US authorities, and in July another $131 million in wallets tied to Iran's central bank and armed forces. So a dollar on a blockchain stays under the issuer's control, and through it, indirectly, under Washington's.
Who has tried this route before?
Venezuela used Tether and Bitcoin to keep its oil industry going and launched its own Petro token, trying to move the economy out from under SWIFT. The country did not stop at a plan and built an entire legal system around the idea. Iran and North Korea have used similar channels. Israel would join this short list, though from a different starting point.
Its economy is closely tied to the Western banking system. The country's largest bank, Bank Leumi, plans to open Bitcoin trading in early 2027 through Galaxy Digital, if the Bank of Israel approves. So crypto in the country is becoming both an ordinary banking product and a possible emergency exit.
What to expect after the election?
Pressure on Israel is already felt. Britain banned imports from West Bank settlements in early September, and eleven more countries, France and Canada among them, said they intend to restrict trade in such goods. More than 60 Israeli economists and former officials warned this week that measures aimed at settlements could reach the whole economy, and higher prices would not stop at a few goods, according to Ynet.
For now these are only words, four days before the vote, with no document, no author and no deadline. We at Kurslog do not see a ready scenario here. But the statement itself is worth remembering. The next news about Bank Leumi, stablecoins and frozen wallets will read differently.
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