Netanyahu's crypto plan for bank sanctions draws sharp criticism

Prime Minister Benjamin Netanyahu has come under criticism from opposition figures and prominent Israeli journalists after a statement about possible international sanctions on Israel, including preparations to use cryptocurrency as a way around restrictions on Israeli banks. The original wording of the statement is not reproduced in the reports available to us, and what is known of it comes largely from how its critics described it.

Opposition politician Yair Lapid, speaking on the Israeli current affairs programme Seder Olami, said Netanyahu had gone completely off the rails, according to N12, which updated its initial item to note that Lapid was responding both to the sanctions remarks and to the preparations for crypto use. Barak Ravid, the Israeli diplomatic correspondent who reports for the US outlet Axios, called the idea irresponsible, and the Israeli news site Ynet ran commentary dismissing it as nonsense.

What Netanyahu is reported to have proposed

The reports refer to the plan as a "bypass economy", in Hebrew kalkalat ma'akaf, a term that describes an economic system built to route around blocked channels. Ravid wrote that Netanyahu had offered this approach as a response to a scenario in which sanctions are imposed on Israeli banks, with cryptocurrency serving as the alternative channel for doing business.

A Ynet commentary characterised the remarks differently in emphasis. Ynet's piece said the prime minister had in effect acknowledged that continuing his own policies, and his continued tenure, would bring economic sanctions on Israel of a kind never imposed on any Western country. That reading is Ynet's interpretation; the reports do not quote Netanyahu saying so in those terms.

The criticism

Ravid made two arguments. First, he wrote that nobody would work with Israeli businesses through crypto, and that the result would be a collapse in exports, imports and investment along with an outflow of foreign money. Second, he argued that sanctions on the banks would also push Israelis themselves to move money abroad. He described the remark as reckless.

In an earlier post, Ravid framed it as a final pitch ahead of an election, summarising the message sarcastically as a call to vote for Netanyahu if one wants an Iran-style financial system built in Israel. The phrase "pre-election" is his; the reports do not give a date for the vote.

A second Ynet commentary, under a headline playing on the idea of moving from an economy run on faith to one run on coins, argued that a shift to a crypto economy would render Israel's economy, which it described as strong both before and after the attacks of 7/10, illegitimate in the eyes of the world. The piece compared such an outcome to an underworld economy of the kind associated with Russia, North Korea and Iran.

Context for readers outside Israel

International banking runs largely through regulated institutions that hold accounts with one another to settle payments across borders. When sanctions target a country's banks, that access can be cut, which is why critics focus on trade and investment: importers, exporters and foreign investors depend on those links. Cryptocurrency is a digital asset that can be transferred outside the conventional banking system, which is the basis for the idea that it could serve as a workaround. The critics quoted here argue that legitimate foreign partners would not accept it as a substitute.

The comparisons to Iran, Russia and North Korea refer to countries whose economies operate under extensive Western restrictions. For an Israeli audience, the comparison is pointed because Israel has long presented itself as a Western economy integrated into global markets, and its technology and export sectors depend on that integration.

Yair Lapid is a former prime minister and one of the most prominent opponents of Netanyahu. N12 is the news brand of one of Israel's main commercial television channels, and Ynet is the online arm of the newspaper Yedioth Ahronoth. The two Ynet items and Ravid's posts are commentary rather than straight news reports, and they should be read as such.

What the reports do not say

None of the reports reproduces Netanyahu's statement in full or says where and when he made it. They do not say which countries or bodies might impose sanctions, on what grounds, or whether any such measures are actually under consideration. They do not describe any concrete government plan, timeline or agency responsible for a crypto alternative, and it is unclear from the material whether "preparations" refers to formal steps or to remarks. No response from Netanyahu's office to the criticism appears in the reports. Ynet's reading that Netanyahu linked sanctions to his own continued tenure is not confirmed by the other sources.