Israel's central bank has rejected Prime Minister Benjamin Netanyahu's idea of using cryptocurrency to get around potential sanctions. More than 100 economists also warned against the plan, days before Tuesday's national election.
Israel's central bank has rejected Prime Minister Benjamin Netanyahu's suggestion that cryptocurrency could help the country get around potential international sanctions. The rebuke, described as rare and public, came days before Tuesday's national election.
The Bank of Israel said in a statement on Saturday that cryptocurrencies "cannot serve as a means to circumvent sanctions imposed on Israel", according to the Financial Times.
Netanyahu asks for a blockchain plan
Netanyahu said in a Channel 10 interview on Friday that Israel needed to prepare for possible banking sanctions. He said he had asked for a plan to use crypto and blockchain networks to get around them.
However, he did not say who was drafting the plan or which currency or network it would use. Netanyahu later said he was taking the central bank's position into account but would do what he believed was best, The Times of Israel reported.
Economists and rivals push back
On Sunday, more than 100 economists, including former Bank of Israel governor Jacob Frenkel and several Nobel laureates, signed a letter warning the plan would bring higher unemployment and a collapse in foreign investment, Reuters reported.
Netanyahu's main challenger, Gadi Eisenkot, called the idea madness and said it would drive companies abroad. Opposition leader Yair Lapid compared what Netanyahu called a bypass economy to those of Iran, Russia and Venezuela.
Public blockchains leave a trail
Economists also questioned whether the plan would work at all. Gali Ingber, head of finance studies at the College of Management Academic Studies, told The Times of Israel that digital currencies cannot circumvent sanctions because the blockchain is publicly open and every transfer can be traced to its origin.
Israel has itself used that traceability. In July, Defense Minister Israel Katz signed sanctions orders on 37 crypto wallets holding more than 24 million shekels that Israel said belonged to Iran's Revolutionary Guards.
Tether, the company behind the USDT stablecoin, can freeze any wallet holding its token. It froze $131 million in July in wallets tied to Iran's central bank and armed forces after U.S. sanctions.
Opinion polls point to a possible stalemate, with neither Netanyahu's coalition nor the opposition alliance on course for a governing majority.
Source: Decrypt
Trading involves risk.
Risk Disclaimer
