Netanyahu’s Blockchain Bypass Talk Hits Israel First

Israeli Prime Minister Benjamin Netanyahu said on October 23 that he had already asked for a blockchain plan if banking sanctions hit Israel. He spoke to Roy Katz on Channel 10, four days before the October 27 Knesset election, and warned that tens of billions of dollars in American defense aid would not keep coming.

He named no ministry, no chain, and no date. A senior Israeli economic official, quoted the same day on Channel 12, said the idea would not work and that the conversation itself could hurt the economy.

The Channel 10 Answer Stopped at a Plan

Katz put the sanctions risk to him directly. Netanyahu said he was concerned. He then reached for a second track besides weapons and factories: money that does not have to clear through a foreign bank.

You have to understand that there could be banking sanctions. You need to prepare an economy that can circumvent them, and I’m working on that as well.

Benjamin Netanyahu, prime minister, Channel 10, October 23, 2026

When Katz asked whether blockchain was that alternative, Netanyahu did not hedge. “One of them, certainly. I have already asked for a plan to be prepared for that,” he said, in a Hebrew transcript translated for English desks. He added that Israelis already knew “the currencies that bypass this.”

The clip is the whole deliverable. There is still no white paper, no tender, and no named drafter.

הראשון לזהות?: "צריך להתארגן בכלכלה עוקפת לסנקציות בנקאיות, הבלוקצ'יין הוא חלופה, ביקשתי להכין תכניות לזה". נתניהו בראיון לערוץ 10 על ההיערכות לחרם כלכלי בינלאומי וסנקציות כלכליות על ישראל pic.twitter.com/UJbZ8y7Sbh

— Roy Katz רועי כ"ץ (@roy_katz) October 23, 2026

WHAT THE ANSWER LEFT OPEN

• The author: Netanyahu did not say which office, bank, or adviser would write the plan.
• The rail: He did not name Bitcoin, a dollar stablecoin, a shekel token, or a private ledger.
• The clock: He gave no date for a draft, a test, or a live payment.
• The off-ramp: He did not say how an Israeli importer would turn a token into dollars, euros, or goods once foreign banks stepped back.

Crypto desks treated the clip as proof that governments now keep coins in the drawer. Israeli political argument heard something else: a sitting prime minister telling voters, days before a ballot, that the aid pipeline and the banks were already in doubt.

A Senior Official Called the Talk Itself Harmful

Correspondent banking is a confidence trade. Foreign banks process shekel payments because they still want the relationship, not because a white paper exists in Jerusalem. A public war game about a cutoff is the kind of sentence compliance teams screenshot.

The idea will certainly not achieve its goal. Even talking about it could harm the economy.

Senior Israeli economic official, quoted on Channel 12, October 23, 2026

That is the trap inside the upside. A blockchain hedge is supposed to make Israel harder to isolate. Saying out loud that isolation is now a planning case can make dollar and euro clearers tighten files before any token moves a crate of goods.

Research on past designations shows why that file review matters. After a US listing, targeted banks’ dollar correspondents fall after designation from 89 percent to 20 percent, and the share with a US-based dollar correspondent falls to 11 percent, according to a CEPR column on the global payments network. Israel has not had an Israeli bank listed. The interview still puts that map on the table.

Opposition leader Yair Lapid seized the clip as a campaign confession. He wrote that Netanyahu “now admits, in his own words: if his government is reelected, American security aid will come to an end and Israel will face sanctions that would devastate our economy, lead to runaway price hikes, and cause irreparable damage.” Democrats leader Yair Golan called the performance “detached and hysterical” and said the way to avoid sanctions was to restore alliances, not to route around them.

Columnist Nadav Eyal, posting the interview video, wrote that the remarks were “definitely going to influence discourse in these elections.” By October 24, economists and academics were already describing the crypto bypass talk as dangerous and irresponsible, warning that it pointed toward isolation rather than a working hedge.

What a Digital Shekel Cannot Bypass

Israel does have a digital-money project. It is the opposite of a dark rail. The Bank of Israel has studied a central bank digital currency since 2017 and, on March 3, 2025, published a preliminary design for a Digital Shekel: a payment balance that would be a direct liability of the central bank to holders, for households and for financial firms. The design was written to be technology-agnostic. Staff have not decided that it must sit on a public blockchain.

THE DIGITAL SHEKEL CLOCK

1. 2017: The Bank of Israel begins studying a possible digital shekel alongside cash.
2. End of 2020: The Digital Shekel Project action plan launches.
3. March 3, 2025: The bank publishes the preliminary design and asks for public comment.
4. 2025 into 2026: Staff run a cost-benefit review, technological consultations, and a 2025 progress report on the Digital Shekel that finds benefits above costs on welfare grounds, still without an issuance decision.
5. Toward the end of 2026: A recommendation is due to the governor on whether to issue the coin at all.

A sanctioned state cannot print its way around a correspondent freeze with a coin whose only issuer is that state’s own central bank. If foreign banks will not touch Bank of Israel money, they will not touch a Digital Shekel either. The project is built for domestic payments competition and resilience, not for hiding from Washington or Brussels.

The banking supervisor has been moving in the other direction. On October 8, Nir Hirschman, chief executive of the Israeli Crypto Companies Forum, said Bank of Israel Directive 411 had taken effect, a change meant to let crypto proceeds enter Israeli banks under money-laundering and terror-finance rules. That is an on-ramp into the regulated system, not an exit from it.

Hirschman welcomed any serious look at the industry after the Channel 10 interview, then drew a line Netanyahu’s phrasing ignored. Crypto, he wrote, is not a haven for hiding money. “Public blockchain networks allow for transparency and tracking of transactions,” he said. He wants tax repair and a Bitcoin reserve. He does not sell a secret ledger.

Russia’s On-Chain Detour Met a Freeze

The comparison Netanyahu invited is already on a public chain, and it is a poor advertisement. Russia’s A7 network issued A7A5, a ruble-backed stablecoin, in January 2025 as a way to move value when Western banks would not. Elliptic, the blockchain-analytics firm, later counted more than $100 billion in transfers in less than a year, with $17.3 billion of exchange volume, mostly as a bridge into Tether’s dollar token.

Then the same states that run dollar clearing treated the token as a sanctions object. Elliptic found no major new issuance after late July 2025, about 42.5 billion tokens still in circulation, worth $547 million, and a stall in demand once listings and venue pressure landed. A coin can move. The ramps can still be shut.

Iran’s use of Bitcoin and dollar stablecoins for imports sits in the same family: a workaround that depends on exchanges, cash-out shops, and counterparties who can be listed next. Israel’s economy is larger, more open, and much more tightly wired to US and European banks than those two war economies. Copying the tool does not copy the conditions.

Stablecoins and public chains also leave a trail. That is why Hirschman’s warning sits on the same day as the interview. A payments bunker that every analytics firm can watch is a strange place to hide a trading nation.

JPPI Counts 139 Measures in 64 Countries

The pressure Netanyahu described is not imaginary, and it is not yet a SWIFT ban. The Jewish People Policy Institute’s snapshot dated October 18, 2026, records 139 measures across 64 countries and entities, every entry tied to a verified official source. That tally includes 17 academic measures. 94 non-academic measures are in force; 111 measures are in force once the academic file is added. Nine are proposed. Nineteen are historical.

Britain and 11 other Western countries recently moved against goods from Israeli settlements in the West Bank, after settler violence and new construction. The UK-led package is written to hit settlements, not Tel Aviv payrolls. Economists still warn that banks and buyers can widen the net on their own, which is how “chilling effect” turns into slower letters of credit.

TOP COUNTRY COUNTS IN THE JPPI OCTOBER 18 FILE

Those country figures mix live, old, and proposed steps. They are not a ranking of economic pain. Spain’s file is not a substitute for a New York clearer walking away. Dr. Shuki Friedman, JPPI’s director general, has argued that the damage runs through uncertainty: firms and banks choosing a quieter market rather than waiting for the next listing.

Before the interview, more than 60 economists, academics, and former officials in the Economists Forum warned that settlement measures could spread and raise living costs if policy in Gaza and the West Bank kept feeding the isolation. Netanyahu told Channel 10 the threat came because “America has changed. Not because Israel has.” His rivals say the government’s own choices are the bill.

Why the Election Now Runs Through the Banks

The same interview folded in the aid relationship that has sat under Israeli defense planning for decades. “If you think we will continue receiving what I twice secured, which is tens of billions of dollars in American aid for the defense budget, prepare yourselves and get used to the fact that it won’t happen anymore, because America has changed,” Netanyahu said. “It’s over, and it will be over. It’s just a matter of time.”

He has argued before that Israel should make more of its own ammunition and wean itself off that pipeline. Last year he sketched a harsher version, a self-reliant “super-Sparta,” then tried to walk the phrase back after the uproar. The October 23 version is the same bet in banking language: assume the West gets colder, and build around it.

He also dismissed Bank of Israel Governor Amir Yaron’s warnings on the defense budget. “I disagree with him. Unequivocally, I disagree with him,” Netanyahu said. A fight with the central bank over guns, on the same day as a request for a sanctions-bypass plan, is a lot of stress to load onto the shekel’s minders at once.

Legal isolation sits in the same week as the financial talk. Netanyahu still faces International Criminal Court arrest warrants that crimp where he can travel in Europe. Settlement sanctions, campus measures, and a requested blockchain bunker are not the same instrument. They add up to a government that now describes Western money as a variable, not a given, three days before voters mark a ballot.

None of that makes a working bypass. Tokens still have to cash out. Foreign suppliers still want dollars or euros. A Digital Shekel still lives at the Bank of Israel. Russia’s ruble token moved huge sums and then ran into the same states that police the ramps. Hirschman is right that a public chain is a glass box. The Channel 12 official is right that the sentence can move markets before the code does.

Israelis vote on October 27. The plan Netanyahu said he asked for still has no author, no chain, and no date. The banks heard the scare first.

Disclaimer: This article is news reporting and analysis of public statements, official datasets, and research notes. It is informational only and is not investment advice, legal advice, or a recommendation to buy, sell, or hold any cryptocurrency, token, stablecoin, or security. Readers who are considering any financial or legal step tied to sanctions, digital assets, or cross-border payments should consult a licensed financial adviser and a qualified sanctions lawyer in their jurisdiction. Figures and statuses are those published by the named agencies and researchers as of the article’s sources and can change with new listings, election results, or central-bank decisions.