Netanyahu Explores Crypto to Counter Sanctions, Following Russia and Iran

Israeli Prime Minister Benjamin Netanyahu has proposed utilizing digital currencies as a strategy to prepare for potential banking sanctions. This suggestion comes as the use of cryptocurrencies by sanctioned entities has surged dramatically, reaching at least $104 billion in 2025, an almost eightfold increase from the previous year, according to a Chainalysis report. The total volume of illicit activity on blockchain networks hit a record $154 billion.

Cryptocurrencies have become a primary financial channel for isolated nations, with Russia, Iran, North Korea, and Venezuela integrating them into their strategies to circumvent traditional banking systems. However, these transactions are not immune to blocking. Approximately 84% of illicit transactions involve stablecoins, which are cryptocurrencies pegged to traditional currencies like the U.S. dollar. Issuers of these stablecoins can freeze assets, and have done so to combat sanctions evasion.

Russia has developed its own ruble-backed stablecoin, A7A5, launched in February 2025. This cryptocurrency, secured by deposits in the sanctioned Promsvyazbank, has seen over $93.3 billion in transactions in less than a year, surpassing $100 billion according to Bloomberg in January 2026. TRM Labs estimates that A7A5 accounts for about half of all crypto flows linked to illicit activities. The launch followed a 2024 Russian law aimed at enabling sanctions evasion via cryptocurrencies. Despite U.S. and UK sanctions in August 2025 against companies allegedly behind A7A5, and the shutdown of the Garantex exchange infrastructure by the U.S., Germany, and Finland in March 2025, A7A5's issuer denies wrongdoing, with its Director of Regulatory Affairs Oleg Ogienko stating its primary function is facilitating Russian import and export settlements and calling accusations politically motivated.

Iran utilizes cryptocurrencies for both state-linked entities and private investors, driven by sanctions and currency devaluation. Reuters estimated Iran's crypto transactions at $8 to $10 billion in the past year as of February 2026. The Islamic Revolutionary Guard Corps is particularly active, with its crypto addresses holding over half the value of funds received by Iranian crypto services by the end of 2025, totaling over $3 billion for financing regional allies, oil trade, and procurement networks. Russia and Iran are also reportedly using cryptocurrencies to pay for drones and components.

Venezuela uses digital assets mainly in oil trading, with state oil company PDVSA shifting sales to Tether's USDT stablecoin to reduce the risk of frozen revenue on foreign bank accounts. North Korea, however, primarily obtains cryptocurrency through theft, with regime-linked hackers stealing over $2 billion in 2025, including a record $1.5 billion from the Bybit exchange hack in February. Chainalysis reported 2025 as the most damaging year for North Korean cyber theft.

The vulnerability of stablecoin transactions is highlighted by the freezing of $26 million in USDT after the Garantex operation, based on U.S. Secret Service intelligence. Tether has also announced it will block addresses linked to U.S. sanctions lists, a move that prompted Russia to create its own stablecoin.