Israel’s central bank has rejected the idea that crypto could help the country get around possible sanctions, days after Prime Minister Benjamin Netanyahu said he had asked for a plan to do just that.
In a statement on Saturday, reported by the Financial Times, the Bank of Israel said cryptocurrencies “cannot serve as a means to circumvent sanctions imposed on Israel.” It said the right course is to “preserve economic relations with our primary trading partners.”
What Netanyahu said
In an interview with Channel 10 on Friday, Netanyahu said Israel needed to prepare for possible banking sanctions, and that he had asked for a plan to use crypto and blockchain networks to get around them.
“Blockchain is one of the alternatives, certainly,” he said. He did not say who was drafting the plan, or which currency or network it would use.
After the central bank’s statement, Netanyahu said he was taking its position into account but would do what he believed was best, according to The Times of Israel.
Economists push back
On Sunday, more than 100 economists, including former Bank of Israel governor Jacob Frenkel and several Nobel laureates, signed a letter warning of higher unemployment and a collapse in foreign investment, Reuters reported.
The letter called the plan “a puzzling solution, one accepted in criminal organizations, that will not help in the slightest.”
Why crypto does not hide transactions
Gali Ingber, head of finance studies at the College of Management Academic Studies, told The Times of Israel that sanctions cannot be avoided using digital currencies, because blockchains are public and traceable.
Israel itself has used that. In July, Defence Minister Israel Katz signed sanctions orders against 37 crypto wallets holding more than 24 million shekels, which Israel says belong to Iran’s Revolutionary Guards.
What happens next
Israel votes on Tuesday, 27 October, with polls pointing to a possible stalemate. Whether any blockchain plan goes further will depend on who forms the next government.
