Hatch

America

Identity

<h2 style="margin: 30px 0 12px; font-size: 0.9em; letter-spacing: 0.12em; text-transform: uppercase; color: #d97706;" id="key-takeaways">Key Takeaways</h2>
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 <p style="margin: 0; padding: 12px 14px; border-top: 3px solid #d97706; background: rgba(217, 119, 6, 0.1); color: inherit;"><strong>Netanyahu: Israel must organise a “bypass economy”</strong></p>
 <p style="margin: 0; padding: 12px 14px; border-top: 3px solid #d97706; background: rgba(217, 119, 6, 0.1); color: inherit;"><strong>No token, network or timeline named yet</strong></p>
 <p style="margin: 0; padding: 12px 14px; border-top: 3px solid #d97706; background: rgba(217, 119, 6, 0.1); color: inherit;"><strong>UK plans action on services financing settlements</strong></p>
 <p style="margin: 0; padding: 12px 14px; border-top: 3px solid #d97706; background: rgba(217, 119, 6, 0.1); color: inherit;"><strong>OFAC: crypto carries the same sanctions duties</strong></p>
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<p>He made the comments in an <a href="https://tv10.co.il/news/israel/126201/" rel="noopener noreferrer nofollow">October 23 interview with Channel 10’s Roi Katz</a>.</p>
<h2 id="a-bypass-economy">A “bypass economy”</h2>
<p>Asked how worried he was about economic sanctions against Israel, Netanyahu said he was, and that banking sanctions were possible. He then pointed to “the currencies that get around this” and said he was working on that as well.</p>
<blockquote style="margin: 24px 0; padding: 14px 20px; border-left: 4px solid #d97706; background: rgba(217, 119, 6, 0.08); color: inherit;">
 <p style="margin: 0 0 6px; font-size: 1.1em;">“You need to organise a bypass economy.”</p>
 <p style="margin: 0; font-size: 0.85em; opacity: 0.8;">Benjamin Netanyahu to Channel 10, translated from Hebrew</p>
</blockquote>
<p>When Katz asked whether blockchain was the alternative, Netanyahu answered “one of them, certainly,” and said he had already asked for a plan to be prepared. Channel 10’s report does not name a token, network, operator or timeline. Netanyahu also told Katz that Israel should not expect to keep receiving U.S. defence aid on the scale of the tens of billions of dollars it has received before, because America has changed.</p>
<h2 id="what-britain-has-announced">What Britain has announced</h2>
<p>Britain’s latest measure is narrow, and the interview did not connect Netanyahu’s remarks to it. On October 19, UK Foreign Secretary Ed Miliband <a href="https://www.gov.uk/government/news/foreign-secretary-statement-on-the-deadline-for-bids-for-the-e1-settlement-tender" rel="noopener noreferrer nofollow">said Britain had created new powers</a> to sanction individuals and companies involved in building settlements such as E1, which the UK government describes as illegal, and urged businesses not to bid in the tender.</p>
<p>Miliband also restated plans for legislation banning goods from settlements and for “action on services that finance or facilitate them.” That is the finance-related part of the UK’s approach, and it targets settlement activity, not Israel’s banking system.</p>
<h2 id="who-can-stop-a-crypto-payment">Who can stop a crypto payment</h2>
<p>A blockchain can move tokens without a bank, but the points where money enters and leaves still answer to regulators. The U.S. Treasury’s <a href="https://ofac.treasury.gov/faqs/560" rel="noopener noreferrer nofollow">Office of Foreign Assets Control</a> says sanctions obligations for people under its jurisdiction are the same whether a payment is made in digital currency or traditional money.</p>
<div style="margin: 24px 0; overflow-x: auto;">
 <table style="width: 100%; border-collapse: collapse; text-align: left; font-size: 0.95em; color: inherit;">
  <thead>
   <tr style="background: #b45309; color: #ffffff;">
    <th style="padding: 11px 14px;" scope="col">Payment rail</th>
    <th style="padding: 11px 14px;" scope="col">Who can block it</th>
    <th style="padding: 11px 14px;" scope="col">How</th>
   </tr>
  </thead>
  <tbody>
   <tr>
    <td style="padding: 11px 14px; border-bottom: 1px solid rgba(217, 119, 6, 0.35);"><strong>Dollar stablecoins</strong></td>
    <td style="padding: 11px 14px; border-bottom: 1px solid rgba(217, 119, 6, 0.35);">The issuer</td>
    <td style="padding: 11px 14px; border-bottom: 1px solid rgba(217, 119, 6, 0.35);">Blocking addresses and freezing tokens, including on government orders</td>
   </tr>
   <tr style="background: rgba(217, 119, 6, 0.07);">
    <td style="padding: 11px 14px; border-bottom: 1px solid rgba(217, 119, 6, 0.35);"><strong>Exchanges and banks</strong></td>
    <td style="padding: 11px 14px; border-bottom: 1px solid rgba(217, 119, 6, 0.35);">The platform and its regulators</td>
    <td style="padding: 11px 14px; border-bottom: 1px solid rgba(217, 119, 6, 0.35);">Identity checks, sanctions screening, refusing to convert or pay out</td>
   </tr>
   <tr>
    <td style="padding: 11px 14px;"><strong>The network itself</strong></td>
    <td style="padding: 11px 14px;">Sanctions authorities</td>
    <td style="padding: 11px 14px;">Designating the issuer, exchange or operators behind it</td>
   </tr>
  </tbody>
 </table>
</div>
<p>Circle’s <a href="https://www.circle.com/legal/usdc-terms" rel="noopener noreferrer nofollow">USDC terms</a> let it block addresses and act on valid government orders, and conversions into bank money require identity checks even in regulated markets, as with <a href="https://coindoo.com/usdc-gets-eu-significant-status-what-changes/" rel="noopener noreferrer nofollow">EEA holders redeeming USDC</a> through Circle’s French entity.</p>
<p>Russia offers a recent example of crypto rails under sanctions pressure. After law enforcement shut down the Russian exchange Garantex in March 2025, Tether froze about $28 million in USDT belonging to its customers, according to blockchain analytics firm <a href="https://www.elliptic.co/blog/ruble-backed-stablecoins-the-importance-of-identifying-indirect-sanctions-exposure" rel="noopener noreferrer nofollow">Elliptic</a>. In August 2025, OFAC sanctioned the issuer of A7A5, a ruble-backed stablecoin used for cross-border payments, along with Grinex, the exchange set up by Garantex’s operators. Elliptic warns that businesses with even indirect exposure to the token can face sanctions risk. Israel is not under the kind of broad sanctions regime Russia faces, but the case shows where crypto payments can be cut off.</p>
<div class="read-more pb-3 pt-3 pt-md-2 px-3 my-4 border bg-light">
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   <h4 class="title mb-0">New York Wants $1.3B From Crypto Founders Who Fled</h4>
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</div>
<h2 id="where-the-bank-of-israel-fits">Where the Bank of Israel fits</h2>
<p>Netanyahu did not say who would draw up the plan. The Bank of Israel already runs a <a href="https://www.boi.org.il/en/communication-and-publications/press-releases/the-bank-of-israel-publishes-a-2025-progress-report-on-the-digital-shekel-project/" rel="noopener noreferrer nofollow">digital-shekel project</a>, though nothing in Channel 10’s report links it to his request. Elsewhere in the interview, Netanyahu said he “unequivocally” disagrees with Governor Amir Yaron’s warnings about the growing defence budget, and defended an additional NIS 400 billion for defence over the coming years.</p>
<h2 id="what-to-watch">What to watch</h2>
<div style="margin: 22px 0; color: inherit;">
 <p style="margin: 0 0 10px; padding-left: 14px; border-left: 3px solid #d97706;"><strong>Who owns the plan:</strong> whether the Finance Ministry, the Bank of Israel or another body is tasked with preparing it.</p>
 <p style="margin: 0 0 10px; padding-left: 14px; border-left: 3px solid #d97706;"><strong>What it is for:</strong> a general backup if payment channels are disrupted, or a response to targeted measures such as Britain’s.</p>
 <p style="margin: 0; padding-left: 14px; border-left: 3px solid #d97706;"><strong>The UK’s next step:</strong> how far its planned action on settlement-financing services reaches into banking.</p>
</div>
<p style="text-align: center; font-size: 0.9em;"><em>This article is provided for informational purposes only and does not constitute legal, financial or investment advice.</em></p>
<p>The post <a href="https://coindoo.com/israel-eyes-blockchain-sanctions-escape-hatch/" rel="noopener noreferrer nofollow">Israel Eyes Blockchain as a Sanctions Escape Hatch</a> appeared first on <a href="https://coindoo.com" rel="noopener noreferrer nofollow">Coindoo</a>.</p>

Israel Eyes Blockchain as a Sanctions Escape Hatch

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