Netanyahu Explores Crypto for Sanctions Evasion, Experts Skeptical

By ליאור באקאלו

Translated & summarized from Mako by baba

CenterNeutral tone

Hebrew · 8 newsrooms covering

Prime Minister Benjamin Netanyahu has suggested exploring the use of cryptocurrencies to bypass potential international sanctions against Israel. However, experts like Inga Eisenberg from the Israel Bar Association argue that switching payment methods to crypto would not negate sanctions and cannot isolate the economy. While Israel has technological capabilities, a full transition faces significant infrastructure and regulatory hurdles. Experts advise citizens against investing in crypto based on this discussion, citing its inherent risks and the uncertainty of its effectiveness against sanctions.

The story in 5 lines · by baba

Prime Minister Netanyahu proposed exploring cryptocurrency use to circumvent potential sanctions on Israel.
Experts doubt crypto would effectively bypass sanctions, as payment method doesn't negate underlying restrictions.
Crypto cannot isolate an economy; a functioning economy requires credit, insurance, and international trade.
Israel has tech expertise, but a full crypto economy faces major infrastructure and regulatory challenges.
Experts caution citizens against investing in crypto based on this discussion due to its risks.

Netanyahu Explores Crypto for Sanctions Evasion, Experts Skeptical — Editorial illustration generated by baba News, not a photograph of the event.

Prime Minister Benjamin Netanyahu has proposed exploring the use of cryptocurrencies as a potential strategy to circumvent international sanctions that could be imposed on Israel. In a recent interview, Netanyahu revealed he had ordered an examination of a scenario where Israel might transition to using crypto for payments.

However, legal and financial experts express significant doubts about the feasibility and effectiveness of such a plan. Inga Eisenberg, Chairwoman of the Cryptocurrency Committee at the Israel Bar Association, explained that simply switching payment methods from traditional banking to crypto would not inherently nullify sanctions. She noted that if a country or entity is prohibited from engaging in transactions, the method of payment, whether crypto or bank transfer, does not change the underlying restriction.

Eisenberg further elaborated that while crypto can offer alternative payment channels and reduce reliance on traditional banking, it cannot isolate an entire economy from the global financial system. A functioning economy requires more than just payment capabilities; it needs credit, insurance, international trade, and willing partners. She also pointed out that crypto is not outside the realm of law enforcement, citing Israel's experience in tracking and seizing digital assets linked to terrorism financing. Blockchain technology, she added, often leaves a traceable record of transactions.

Regarding Israel's readiness, Eisenberg acknowledged the country's significant technological expertise and activity in the digital asset and blockchain space. However, she stressed that implementing an entire economy on crypto would require robust secure infrastructure, clear regulation, public protection mechanisms, and user-friendly systems for citizens and businesses. She distinguished between private cryptocurrencies and a potential digital shekel being explored by the Bank of Israel, emphasizing the latter would be a sovereign commitment unlike volatile assets like Bitcoin.

For ordinary citizens, experts advise against rushing to buy crypto based on this discussion. The impact of potential financial restrictions on the public would depend on the nature and scope of those sanctions, affecting everything from money transfers to prices and business operations. Holding crypto does not offer immunity from these consequences and comes with its own risks, including volatility and potential fraud. Financial decisions should be based on individual needs and risks, not on speculative scenarios.