Netanyahu Says Israel Mulls Crypto Ahead of Possible Sanctions

(Bloomberg) -- Benjamin Netanyahu said he is exploring the use of cryptocurrency to circumvent potential financial sanctions on Israel, drawing criticism from opposition figures who said it would turn the Jewish state into an economic pariah like Iran.

"We need to prepare ways to evade banking sanctions through an alternative economic system," the prime minister said in an interview with Israel's Channel 10. "You know what that means — the currencies that can bypass them. I'm working on that too." Asked whether he meant crypto, the prime minister said: "Very correct."

Netanyahu was speaking ahead of the Oct. 27 election, where he faces a strong challenge from former general Gadi Eisenkot.

Opposition leader Yair Lapid said the prime minister's proposal for evading potential sanctions "belongs to countries like Iran, Russia, and Venezuela — nations whose banks are cut off from the world, whose companies cannot accept payments, and whose young people are fleeing."

"That's his vision," Lapid added in a post on X.

Last month, 12 major countries led by the UK pledged coordinated measures against Israeli settlements in the West Bank. UK Foreign Secretary Ed Miliband said the moves would also cover individuals and companies providing financing, construction and other services to the settlements.

That raised fears of sanctions on Israeli banks that could rattle the tech-export-driven economy.

"The concern is that foreign banks will cease providing correspondent services to their Israeli counterparts, effectively severing Israel's ability to conduct international economic activity," said Yair Avidan, a former banking supervisor at the Bank of Israel.

Netanyahu "is finally admitting that Israel faces a real danger of diplomatic isolation and economic sanctions, yet instead of explaining how he intends to prevent them, he is already talking about preparing a 'sanctions-bypassing economy,'" said former Finance Minister Avigdor Liberman, leader of Israel Beytenu, an opposition party. He vowed to "break Israel out of diplomatic isolation and eliminate the threat of sanctions" if the opposition takes power.

In the interview, Netanyahu also warned that decades of US military aid would end, forcing Israel to finance its defense on its own.