Bank of Israel: "Opposes Netanyahu's Plan to Use Crypto Assets to Circumvent Financial Sanctions"

Netanyahu: "Sanctions on settlements can be circumvented"
Risk of Israeli banks losing correspondent banking services

Reuters-Yonhap News

The Bank of Israel has firmly rejected Prime Minister Benjamin Netanyahu's proposal to use crypto assets as a way to circumvent Western countries' financial sanctions against settlements. It warned that the economic damage from misusing crypto assets to evade sanctions would be far greater. The controversy is intensifying ahead of Israel's general election.

According to Bloomberg on Oct. 26, the Bank of Israel said in a statement issued earlier, "Crypto assets cannot be used to circumvent sanctions against Israel." It stressed that "the right course for the Israeli economy is to maintain economic ties with key trading partners and focus on preventing sanctions and the economic harm they would cause."

The statement is seen as a rebuttal to Netanyahu's remarks that crypto assets could be used to get around Western sanctions against Israeli settlements. In an interview with Israel's Channel 10 on Oct. 23, Netanyahu said, "We need to prepare ways to evade sanctions through an alternative economic system." Asked whether he was referring to crypto assets as a means of circumventing sanctions, he replied, "Exactly."

Meanwhile, Western countries are stepping up pressure over settlements in the West Bank, which Israel continues to expand without international approval. Last month, 12 major Western countries, including the United Kingdom, France and Canada, pledged joint measures related to West Bank settlements. They have warned that individuals and companies providing financial and construction services to the settlements could also face sanctions.

Concerns are growing in Israel and abroad that if sanctions related to settlement projects expand, they could block major Israeli banks from conducting transactions with foreign entities, harming exports and investment. There is also a risk that foreign banks could suspend correspondent banking services for Israeli banks, bringing international economic activity to a halt.

Opposition from Israel's business community is also growing. On Oct. 25, 100 businesspeople and economists, including former central bank and finance ministry officials, issued an open letter expressing deep concern about Netanyahu's plan to use crypto assets to circumvent sanctions. They warned that Western financial sanctions could hurt banks, businesses, exporters and investors, and disrupt the use of credit cards and international e-commerce.

Political controversy is also mounting ahead of Israel's general election on Oct. 27. Former Prime Minister and Israeli opposition leader Yair Lapid sharply criticized the proposal, saying, "Under Netanyahu's plan, Israel would become a country cut off from the international financial system." He added, "His plan to circumvent sanctions is just like the approach taken by Iran, an enemy state."

This content was produced with the assistance of AI translation services.