Israeli Prime Minister Benjamin Netanyahu has called for a plan exploring alternative economic infrastructure, including blockchain technology and digital currencies, to help Israel withstand potential international sanctions, according to reports.

The proposal centers on whether on-chain payment systems could offer alternative channels for transferring money, settling transactions, and tokenizing assets. In this context, tokenization refers to representing assets as digital tokens that can be recorded and transferred on a blockchain. Such systems could potentially reduce reliance on individual financial intermediaries by moving certain payment and settlement functions onto blockchain-based rails. That reliance is significant because conventional cross-border payments run through chains of banks and correspondent relationships — the same channels through which sanctions are typically enforced.

However, on-chain systems cannot guarantee access to foreign exchange, overseas suppliers, or international markets if sanctions restrict the financial relationships involved. They may change how payments move, but they do not by themselves secure access to the foreign counterparties, suppliers, and markets an economy depends on.

Steps Already Taken

Israel has already taken steps toward integrating blockchain into its financial system. In April 2026, the country approved BILS, a shekel-pegged stablecoin developed by Bits of Gold, following a pilot on the Solana blockchain. Stablecoins are tokens designed to hold a steady value against a reference currency — here, the Israeli shekel — a property that suits them to payment and settlement use. Bank Leumi has also partnered with Galaxy Digital to develop cryptocurrency trading services for customers, while the Bank of Israel continues to assess a potential digital shekel, its central bank digital currency project — a category of sovereign digital money that central banks worldwide have spent years studying.

Taken together, these initiatives demonstrate how blockchain could support digital payments and settlement within regulated financial markets. They do not, however, establish that Israel could bypass international sanctions or operate independently of the global financial system.

What Would Determine Success

The effectiveness of any proposed alternative would hinge on several practical factors: obtaining regulatory approval, securing adequate liquidity, attracting participating institutions, and ensuring that overseas businesses are both willing and legally permitted to accept payments through the system.

Without those conditions in place, on-chain infrastructure would remain a domestic payments tool rather than a substitute for access to the international financial system. Each of those conditions is observable in practice, and measurable progress on them — regulatory rulings, deeper shekel liquidity on-chain, and foreign-counterparty acceptance — would indicate whether the reported plan is moving from concept toward working infrastructure.