Bank of Israel Rejects PM's Crypto Sanctions Evasion Plan
Translated & summarized from Behadrei Haredim by baba
Bank of Israel has stated that cryptocurrencies cannot be used to bypass economic sanctions, contradicting Prime Minister Benjamin Netanyahu's directive to explore such a plan. Netanyahu had suggested using blockchain technology to counter potential international banking sanctions. Experts, including a former banking supervisor, argue that crypto cannot circumvent legal restrictions or replace essential financial relationships. Sources indicate no known plan is being developed.
The story in 5 lines · by baba
- Bank of Israel stated digital currencies cannot bypass economic sanctions against Israel.
- Prime Minister Netanyahu ordered a plan to use blockchain and crypto to counter banking sanctions.
- Former Supervisor of Banks Yair Avidan called the crypto sanctions evasion idea flawed.
- Experts believe crypto cannot replace essential financial relationships or legal compliance.
- Sources within Israel's economic system are unaware of any such plan being developed.
Bank of Israel stated on Saturday evening that digital currencies cannot be used to circumvent economic sanctions against Israel. This clarification follows Prime Minister Benjamin Netanyahu's announcement that he had ordered the preparation of a plan to enable the country to cope with restrictions on the banking system using blockchain technology and cryptocurrencies.
Netanyahu's remarks, made in a Friday interview, had raised concerns in the financial sector about potential damage to pension funds invested abroad. Bank of Israel emphasized that "cryptocurrencies cannot serve as a bypass route for sanctions." The central bank stressed that the correct approach for Israel's economy is to maintain economic relations with its main trading partners and focus on preventing sanctions and their negative impact. It added that this issue falls under the responsibility of the political echelon.
Cryptocurrencies allow fund transfers between digital wallets without direct use of traditional banks. However, the Bank of Israel pointed out that fund transfer is only one part of economic activity. Even if an Israeli company could receive payment in digital currency, it would still need clients, suppliers, and financial entities willing to work with it. Furthermore, using crypto does not negate legal prohibitions stemming from sanctions.
Former Supervisor of Banks Yair Avidan criticized the idea of relying on blockchain as a solution, stating that transferring a transaction to a blockchain network or using a digital token does not allow for bypassing sanctions, creating an alternative economy, or nullifying legal prohibitions. He argued that the technology cannot replace the financial relationships upon which the Israeli economy depends.
Despite Netanyahu's statement that he had requested a plan be prepared, sources within the economic system reported no knowledge of such a directive. Senior officials in the Prime Minister's Office were also reportedly unaware of any team working on a plan to circumvent sanctions using digital currencies.
