Blockchain has been thrust into the spotlight of this week’s Israeli election campaign after Prime Minister Benjamin Netanyahu said on Friday that the country could turn to cryptocurrency to shield its economy from the strain of potential international financial sanctions.

Speaking to a local television interviewer, Netanyahu said Israel is exploring the use of blockchain technology and cryptocurrencies as a means of circumventing potential banking sanctions.

“Blockchain is an alternative to sanctions,” the prime minister said in an interview with Israel’s Channel 10 economic network on Friday.

His characterization of blockchain as a “national strategic tool” signals a pivot in the government’s stance on the digital currency industry — recasting it from an investment event into part of the country’s economic defense strategy, according to CryptoJungle, Israel’s largest crypto media platform.

The remarks come amid mounting external pressure. A dozen Western countries have announced sanctions targeting goods from Israeli settlements in the West Bank, in response to attacks on Palestinians by Jewish settlers and an increase in settlement construction approved by Netanyahu’s right-wing government. Economists and industry figures told The Times of Israel last month that those measures could extend into Israel proper. The warnings have made Israel’s access to Western financial channels a central economic question of the campaign.

Several candidates seeking to replace Netanyahu in the Oct. 27 elections, along with the head of the Bank of Israel, were quick to challenge the prime minister’s statement.

“The BibiCoin vision is a threat to national security,” Yashar party leader Gadi Eisenkot wrote in a Saturday morning post on X, using a play on Netanyahu’s nickname. The Bank of Israel said in a statement that it rejected the proposition, that cryptocurrencies “cannot be used as a route for bypassing sanctions.” The clash has effectively elevated digital-asset policy into an election issue, with the central bank’s public rejection underscoring the institutional resistance any such plan would face.

Sharp reaction on the street and in the media

At Saturday evening’s anti-government rally in Tel Aviv, several attendees weighed in on Netanyahu’s blockchain comments.

“An economy that runs on the dark web makes us no better than our enemies,” said Aryeh Cohen, who held a sign reading, in English, “enough Bibi’s B.S.” Another rally attendee, who gave only her first name, Pnina, told Cointelegraph: “What’s next, the Bank of Israel living ’neath the law?”

Media critics also lambasted the idea of using crypto to skirt sanctions.

“The crypto element deserves particular scrutiny. Digital currencies can indeed move value outside some traditional banking channels,” Yediot Ahronot columnist Nadav Eyal wrote in a post on X. “But they are not a substitute for a national financial system. They don’t provide credit lines to banks, they don’t replace international capital markets, and they don’t persuade foreign companies to violate sanctions that bar them from doing business with Israel.”

The skepticism rests partly on how the technology itself works: most major cryptocurrencies run on transparent public ledgers, whose transaction histories can be traced by the blockchain analytics firms and regulators that police sanctions compliance.

“Crypto & blockchain-based solutions are not the tool for bypassing sanctions,” Ben Samocha, founder of CryptoJungle, told Cointelegraph on Sunday. “As demonstrated by the US Treasury against Iran, blockchain investigation allows tracking illicit funds, blocking their fiat gateway, and even freezing them.” The Israeli economy, he added, is not fit to bypass sanctions using crypto.