Netanyahu Is Right About Blockchain Technology

Developing Israel’s blockchain-based financial economy does not undermine Israel’s current system, it enhances it.

Prime Minister Benjamin Netanyahu recently suggested that Israel explore blockchain technology and cryptocurrencies, currently a $3 trillion industry, to protect its economy from potential international banking sanctions. The reaction was overwhelmingly negative.

The Bank of Israel dismissed the idea. Opposition politicians, including Gadi Eisenkot, warned of economic catastrophe. More than 100 economists and business leaders expressed alarm at the possibility of Israel becoming financially isolated.

But the critics ignore a fundamental question: Why shouldn’t Israel develop alternative financial infrastructure that makes its economy less vulnerable to decisions made by foreign governments and financial institutions? 

Preparing for economic isolation is not the same as welcoming it. Exploring technology that reduces dependence on financial intermediaries is not the same as abandoning the international financial system.

Israel’s Financial System Relies on Foreign Intermediaries

Israel has built one of the world’s most innovative technology economies. It has produced globally competitive cybersecurity companies, semiconductor designers, artificial intelligence startups and financial technology businesses.

Yet much of the country’s international financial activity still depends on conventional banking infrastructure controlled by institutions beyond Israel’s borders. This means that governments can exert tremendous influence over international commerce by restricting access to the institutions that make transactions possible.

An Israeli company may have a willing buyer, a willing seller and a perfectly legitimate product, yet still find itself unable to complete a transaction because a bank or payment processor refuses to participate.

Prime Minister Benjamin Netanyahu’s recent proposal to explore blockchain technology as a defense against potential banking sanctions presents an opportunity to change this reality.

How Blockchain Reduces Dependence on Financial Intermediaries

Blockchains allow individuals and businesses to transfer cryptocurrencies directly to one another without relying on banks or payment processors to authorize or execute each transaction.

Consider a Spanish company purchasing cybersecurity services from an Israeli business. Suppose its bank refuses to process the payment amid political pressure to restrict commercial relationships with Israel. The two companies could instead use Bitcoin or another cryptocurrency to transfer payment directly over a public blockchain, bypassing the bank entirely.

For a country like Israel that is increasingly under threat of financial restrictions, developing alternative payment systems is not an act of economic isolation. It is a means of strengthening financial resilience.

Other Countries are Already Adopting Blockchain Technology

Israel would hardly be the first country to explore cryptocurrencies whether in response to international financial restrictions or for financial innovation purposes.

El Salvador under President Nayib Bukele, has adopted blockchain technology in many ways, including making Bitcoin legal tender in the country in 2021 and for international remittance payments. Since adopting it in 2021, El Salvador’s GDP has averaged around 5% per year compared to an average of only 2.4% in the five years ending in 2019.

The UAE, one of the premiere financial hubs in the world, introduced the Emirates Blockchain Strategy 2021, with a goal of migrating 50% of government transactions onto blockchain-based systems. 

In Ukraine, after it was invaded by Russia, the government imposed capital controls and currency restrictions under martial law. Under these restrictions, cryptocurrency provided individuals and organizations with another way to hold or transfer value, especially for cross-border transactions. Today, Ukraine has one of the world’s most active cryptocurrency-using populations. An IMF report published in 2026 estimated that approximately 18% of Ukraine’s population used cryptocurrencies.

Build the Financial Infrastructure Before a Crisis

None of this means blockchain can make sanctions disappear or that Israel should abandon the international financial system.

But it does not follow that developing additional payment infrastructure is economically irrational, as critics say it is.

Israel maintains military contingency plans for scenarios it hopes will never materialize. Its financial system deserves the same attention to resilience.

Rather than dismissing the proposal, as The Bank of Israel, Gadi Eisenkot and Naftali Bennet have, Israel should create a coordinated initiative involving financial institutions and private blockchain companies. Its purpose should be to examine how blockchain-based payment infrastructure and alternative settlement networks can strengthen Israel’s financial system.

The objective should be straightforward: Increase financial flexibility while preserving access to conventional banking, international markets and legitimate trading partners.

The country that helped pioneer modern cybersecurity should not be content to remain dependent on yesterday’s financial infrastructure.

James Delmore is a blockchain analyst and independent writer.