Thirty-seven wallets. More than 24 million shekels. Those are the numbers behind a July 1 order from Defense Minister Israel Katz, who put the addresses under sanctions on the grounds that they belong to Iran's Revolutionary Guards. Four months on, the prime minister of that same government is floating crypto as a way around sanctions that might one day be aimed at Israel. The irony is hard to miss. Nobody in Jerusalem has addressed it.
What Netanyahu said, and what he didn't
On Friday, four days before Israel's Oct. 27 election, Benjamin Netanyahu told Channel 10 that he had asked for a blueprint showing how blockchain could route around potential banking sanctions. Decrypt reported that he described the work as groundwork for an alternative economy, with blockchain among the candidates.
That's all of it. He didn't say who is drafting the plan, which currency or network it would run on, or when anyone might see it. For a policy that supposedly bears on national survival, the detail is thin.
The remarks came wrapped in a larger message about American money. Netanyahu told viewers to prepare for the end of U.S. military assistance, which he treated as a matter of when, not if. The current aid deal is worth $3.8 billion a year and expires in September 2028. He also said he wants independence in weapons production, and named India's Narendra Modi as a partner already talking about cooperation.
The local crypto press read the blockchain comments as a shift. Cointelegraph relayed that CryptoJungle, Israel's largest crypto outlet, took the prime minister's wording as a sign that digital assets were moving out of the investment bucket and into economic defense. That is a tidy reading of one answer to one interviewer. Treat it with some suspicion.
Why sanctions are on the table at all
The pressure is real, if narrow so far. In early September the U.K. barred imports from Israeli settlements and named individuals and companies tied to settlement construction for sanctions. Roughly a dozen Western countries have now acted against settlement goods, and France and Canada are among those signaling they will restrict that trade too. The target for now is the West Bank, not Israel proper.
Economists worry about spillover. Per Ynet, a group of over sixty Israeli economists and ex-officials cautioned this week that the measures could widen into the broader economy and push up the cost of living.
The mechanics are simple. If foreign banks stop processing payments for Israeli banks, importers can't pay suppliers, and eventually the bill lands on the supermarket shelf. That is the scenario Netanyahu says he's insuring against.
The background matters too. In September 2025 a UN-appointed commission of inquiry found that Israel was committing genocide in Gaza. Worth noting: such a panel is independent and its findings are not the organization's own position. Separately, the International Criminal Court's judges approved warrants in November 2024 naming Netanyahu and Yoav Gallant, then his defense minister, over suspected war crimes. Netanyahu has said Israel does not accept them. Whether anyone abroad acts on any of this is the open question.
The pushback came fast
Opponents didn't wait for details. Gadi Eisenkot, who leads the Yashar party, labeled the idea a "BibiCoin" vision and called it a threat to national security. The Bank of Israel went beyond a political jab: its statement said crypto cannot serve as a channel for evading sanctions.
A central bank contradicting a sitting prime minister four days before a vote is unusual. Read it as a signal: the institution wants distance from the idea before anyone starts drawing up paperwork.
Analysts were sharper on mechanics. Nadav Eyal of Yediot Ahronot argued that digital currencies can move value outside some banking channels, but they give banks no credit lines, don't replace international capital markets, and won't talk foreign firms into breaking sanctions rules. Ben Samocha, CryptoJungle's founder, pointed to U.S. Treasury actions against Iran as proof that chain analysis can track, block and even freeze illicit funds.
He has a point, and Israel's own July order is the evidence. Public ledgers are a poor hiding place for a national economy. Expect that argument to follow any draft that does appear.
The precedents aren't encouraging
Venezuela, Iran, Russia and North Korea have all used crypto to move money outside American reach. Caracas went furthest. It used Tether and Bitcoin to prop up its oil sector, launched the Petro, and built legal scaffolding around the effort.
Russia's ruble-pegged token A7A5 is the cleanest case study. It came from a payments company co-owned by a sanctioned state bank, and Elliptic says it moved roughly $102 billion in its first year. Then sanctions arrived, along with a hack of its main exchange, and daily volume fell 96% from the peak. The workaround worked until the enforcers noticed.
Israel's financial system also sits somewhere very different from those four. Its banks are plugged into Western markets. Bank Leumi, the country's largest lender, wants to start Bitcoin trading for clients in early 2027 with Galaxy Digital as its partner, though the Bank of Israel has to approve it first. A country whose biggest lender wants deeper ties to U.S. crypto firms is an awkward candidate for building a parallel rail.
What to watch
Start with Tuesday's vote. If Netanyahu loses, the plan probably dies as a campaign remark, and the question becomes whether his successor says anything about it. If he wins, the first test is whether any ministry or agency is named as author. A named drafter, a budget line or a stablecoin pilot would turn talk into policy. Silence would suggest it was just an answer to a television question.
The second marker is the Bank of Israel's decision on Leumi's Bitcoin service. Regulators who say crypto can't evade sanctions will want to show their own crypto oversight is tight. If that decision slips, the reason it gives will say a lot.