Four days before Israel's national election on October 27, 2026, Prime Minister Benjamin Netanyahu announced he requested a plan using blockchain to bypass potential banking sanctions. Warning that U.S. military aid will end, Netanyahu proposed a 400 billion shekel defense increase. Opposition leader Yair Lapid condemned the crypto plan, warning it risks turning Israel into an economic pariah like Iran or Venezuela as international pressure mounts over West Bank settlements and the war in Gaza.
Netanyahu's proposed blockchain plan
- ▪Benjamin Netanyahu provided no specific details regarding who is drafting the blockchain plan he had requested, which specific networks or currencies it would use, or its implementation timeline
- ▪Israeli Prime Minister Benjamin Netanyahu stated in a Channel 10 interview broadcast Friday, October 23, 2026, that he requested a plan using blockchain technology and alternative currencies to counter potential international banking sanctions
Opposition criticism of the proposal
- ▪Israeli opposition leader Yair Lapid criticized Benjamin Netanyahu's proposal to use blockchain to evade potential banking sanctions, stating that evading sanctions belongs to nations like Iran, Russia, and Venezuela whose banks are isolated globally
- ▪Avigdor Liberman, leader of Israel Beytenu, accused Benjamin Netanyahu of preparing a sanctions-bypassing economy instead of preventing diplomatic isolation and promised to eliminate sanction threats if elected
Israeli crypto sector developments
- ▪Nir Hirschman, CEO of Israel's Crypto Companies Forum, stated that while crypto can connect Israel to global markets, it is not a haven or shelter for money transfers
- ▪Bank Leumi, Israel's largest bank, plans to offer Bitcoin trading in early 2027 through Galaxy Digital, subject to Bank of Israel approval
Growing international sanctions against Israel
- ▪The Jewish People Policy Institute recorded 139 sanctions, restrictions, and diplomatic measures against Israel across 64 countries and entities as of October 18, 2026
- ▪Over 60 Israeli economists and former officials warned that measures by 12 countries led by the UK targeting West Bank settlements could spread to the broader Israeli economy and raise the cost of living
- ▪In early September 2026, the U.K. banned imports from Israeli settlements in the West Bank and announced sanctions on individuals and companies involved in constructing them
- ▪Former Bank of Israel banking supervisor Yair Avidan warned that foreign banks might cease providing correspondent services to Israeli counterparts, severing Israel's international economic activity
International actions over Gaza war
- ▪The International Criminal Court issued arrest warrants in November 2024 for Benjamin Netanyahu and former Defense Minister Yoav Gallant over alleged war crimes in Gaza
- ▪An independent United Nations commission of inquiry concluded in September 2025 that Israel was committing genocide in Gaza
Preparing for post-Trump relations
- ▪Benjamin Netanyahu described Donald Trump as the most friendly U.S. president to Israel in history and stated that Israel must prepare for a less favorable political environment after Trump leaves office
- ▪Benjamin Netanyahu highlighted ongoing cooperation discussions with Indian Prime Minister Narendra Modi as part of preparing for an alternative international partner beyond U.S. President Donald Trump's administration
US military assistance and defense spending
- ▪The existing U.S.-Israel defense agreement provides $3.8 billion annually through September 2028, with Washington providing a supplement of at least $15 billion following Hamas' October 2023 attack
- ▪Benjamin Netanyahu stated that American military assistance to Israel will inevitably end, advising Israelis to prepare for a defense budget without tens of billions in U.S. aid
- ▪Benjamin Netanyahu allocated an additional 400 billion shekels, or approximately $129 billion, to the Israeli defense budget over coming years to strengthen domestic weapons and ammunition manufacturing
Sanctioned nations using cryptocurrency
- ▪Russia's ruble-pegged A7A5 token moved approximately $102 billion in its first year before international sanctions and exchange disruptions reduced its daily transaction volume by 96 percent
- ▪Venezuela used Bitcoin, Tether, and the Petro token to maintain its oil industry and bypass the SWIFT global banking network
Targeting illicit crypto wallets
- ▪Tether froze $131 million in crypto wallets tied to Iran's central bank and armed forces following United States sanctions in July 2026
- ▪On July 1, 2026, Israeli Defense Minister Israel Katz issued sanctions orders on 37 crypto wallets holding over 24 million shekels linked to Iran's Revolutionary Guards and Hezbollah
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