Blockchain has become an issue in this weeks Israeli elections after Prime Minister Benjamin Netanyahu said Friday that the country could turn to cryptocurrency to avoid strains on the economy from any potential international financial sanctions.
He told a local television interviewer that Israel is exploring the use of blockchain technology and cryptocurrencies as a means of circumventing potential banking sanctions.
“Blockchain is an alternative to sanctions,” the prime minister said in an interview with Israels Channel 10 economic network on Friday.
His calling blockchain a “national strategic tool” signals a pivot in the government‘s stance on the digital currency industry, from an investment event into part of the country’s economic defense strategy, reported CryptoJungle, Israels largest crypto media platform.
A dozen Western countries have announced sanctions targeting goods from Israeli settlements in the West Bank in response to Jewish settler attacks on Palestinians and an increase in settlement construction approved by Netanyahus right-wing government. Those sanctions could extend into Israel proper, economists and industry figures told The Times of Israel last month.
Several of the candidates seeking to replace Netanyahu in the Oct. 27 elections, as well as the head of the Bank of Israel, were quick to challenge the prime ministers statement.
“The BibiCoin vision is a threat to national security,” wrote Yashar party leader Gadi Eisenkot in a Saturday morning X post, using a play on Netanyahu‘s nickname. The Bank of Israel in a statement rejected Netanyahu’s proposition, saying that cryptocurrencies “cannot be used as a route for bypassing sanctions.”
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Sharp reaction on the street and in the media
At Saturday evening‘s anti-government rally in Tel Aviv, several onlookers weighed in on Netanyahu’s blockchain statement.
“An economy that runs on the dark web makes us no better than our enemies,” said Aryeh Cohen, holding a sign that said in English “enough Bibi‘s B.S.” Another rally attendee who gave only her first name, Pnina, told Cointelegraph “what’s next, the Bank of Israel living neath the law.”
Media critics also lambasted the idea of use of crypto to skirt sanctions.
“The crypto element deserves particular scrutiny. Digital currencies can indeed move value outside some traditional banking channels,” wrote Yediot Ahronot columnist Nadav Eyal in an X post. “But they are not a substitute for a national financial system. They don‘t provide credit lines to banks, they don’t replace international capital markets, and they dont persuade foreign companies to violate sanctions that bar them from doing business with Israel.”
“Crypto & blockchain-based solutions are not the tool for bypassing sanctions,” Ben Samocha, founder of CryptoJungle, told Cointelegraph on Sunday. “As demonstrated by the US Treasury against Iran, blockchain investigation allows tracking illicit funds, blocking their fiat gateway, and even freezing them.” He said that the Israeli economy is not fit to bypass sanctions using crypto.
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