Israeli Prime Minister Benjamin Netanyahu has requested a blockchain-based plan to help Israel prepare for possible international economic sanctions, including restrictions on the country's banking system.
The prime minister said during an October 23 interview with Israel's Channel 10 that the government must explore alternative financial systems as pressure from Western countries increases.
Netanyahu warned that Israel could face wider economic restrictions affecting its financial institutions. He said the country must prepare alternatives to traditional banking channels if foreign governments introduce tougher measures.
"We need to understand that there could be sanctions, including banking sanctions," Netanyahu said. He added that Israel needed an economy capable of operating despite such restrictions.
When interviewer Roy Katz asked whether blockchain could provide an alternative, Netanyahu replied, "One of them, certainly." He confirmed that he had requested a plan exploring the technology.
However, Netanyahu did not identify the cryptocurrencies, blockchain networks or government agencies that might participate. He provided no implementation date or details of how the proposed system would operate.
Israel has previously explored digital financial infrastructure. In 2025, the Bank of Israel released a preliminary design for the digital shekel, although the central bank had not committed to launching the currency.
Netanyahu's remarks followed restrictions targeting Israeli settlements in the occupied West Bank. Britain and 11 other countries announced plans to introduce or consider restrictions on trade involving Israeli settlement goods.
The governments linked their actions to settlement expansion and violence against Palestinians. However, the announced measures targeted settlement-related activities rather than Israel's entire banking system.
Meanwhile, Israel has continued developing cryptocurrency services through established financial institutions. In August, Bank Leumi partnered with Galaxy to offer cryptocurrency trading services.
Netanyahu did not explain whether existing financial institutions would participate in the proposed blockchain arrangement.
Blockchain networks can transfer digital assets without relying on conventional bank payment systems. However, their use does not automatically remove financial restrictions imposed by governments.
The U.S. Treasury's Office of Foreign Assets Control states that sanctions obligations apply to digital currency transactions as well as traditional payments. Financial firms must therefore comply with applicable restrictions.
Authorities can also trace transactions on public blockchains, while cryptocurrency exchanges may freeze funds linked to sanctioned entities.
Recent U.S. scrutiny of cryptocurrency transactions involving Iran has examined how digital assets move through restricted financial networks.
A senior Israeli economic official separately questioned Netanyahu's proposal, warning that it might fail to achieve its stated purpose.
Netanyahu also warned that Israel should prepare for reduced U.S. military assistance.
"It's only a matter of time," he said, arguing that Israel could not assume Washington would continue providing the same level of support indefinitely.
The United States and Israel signed a USD 38 billion military assistance agreement covering fiscal years 2019 through 2028.
Netanyahu said his government had allocated an additional 400 billion shekels, approximately USD 129 billion, for defense spending over the coming years. He said Israel needed stronger domestic weapons and ammunition production capabilities.
His remarks came before Israel's October 27 parliamentary election. Opposition leader Yair Lapid criticized Netanyahu's warnings, arguing that government policies had contributed to the country's growing diplomatic and economic difficulties.
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