Bank of Israel Says Crypto Cannot Bypass Sanctions as Vote Nears

The Bank of Israel said Saturday that crypto cannot bypass sanctions, while a letter signed by more than 100 economists challenged Prime Minister Benjamin Netanyahu’s blockchain proposal ahead of Israel’s Tuesday, Oct. 27, election.

Netanyahu said Oct. 23 that Israel should prepare for an economy able to keep operating if sanctions affected its banks. He named blockchain as one possible option and said he had requested a plan. He also referred to currencies that might bypass restrictions but named none. His request to explore blockchain for possible banking sanctions remains a proposal: the plan has not been published, and Netanyahu has given no timetable.

The Bank of Israel said Israel should preserve economic ties with its principal trade partners. Netanyahu said Saturday that he had heard the resistance to the idea and would act as he thought best.

A letter signed Sunday by more than 100 economists warned that the approach could hurt jobs and foreign investment, and argued that crypto would not make up for those losses. Former Bank of Israel Gov. Jacob Frenkel and several Nobel laureates were among the signers.

Avigdor Liberman, chairman of Yisrael Beytenu, said blockchain transactions can be traced and accused Netanyahu of holding back crypto regulation. In July, Israel’s defense minister, Israel Katz, signed sanctions targeting 37 cryptocurrency wallets identified by the National Bureau for Counter Terror Financing as linked to Iran’s Revolutionary Guards.

Opposition leader Yair Lapid said Netanyahu’s message amounted to telling voters they could end up waiting in line for bread. Naftali Bennett, who leads B’Yachad, criticized what he described as Netanyahu’s bleak outlook. Israelis are scheduled to vote Tuesday, Oct. 27.