Opinion by: Zack Kelman
Five years ago, during our last Global Taxonomy of Crypto Policy, global banking insiders at the International Monetary Fund unveiled a strict new regulatory framework as the US president publicly (if skeptically) addressed crypto for the first time.
Outsiders began sporadically banning Bitcoin (BTC), and exchanges relocated to offshore experimenters like Malta as crypto became irreversibly intertwined with global politics.
Since then, crypto’s entanglement with global politics has only deepened. This year alone, America dismantled four years of anti-crypto policy, inaugurated a president who campaigned on crypto — even creating his memecoin and with plans for a utility token to fuel his social media site — and passed landmark bipartisan stablecoin legislation. In just half a decade, crypto moved from relative obscurity to political hell and back, especially in America.
How did this happen? The short answer is politics.
America’s political crypto shift
For decades, the US leveraged stringent anti-crypto regulations, especially the Financial Action Task Force’s Travel Rule — forcing crypto firms to Know Your Customer (KYC) clients — to preserve its correspondent banking and dollar-clearing monopoly. But US policy shifted as Americans adopted crypto, and dollar-backed stablecoins reinforced dollar dominance.
Initially, American national politics largely overlooked cryptocurrency. Although the Internal Revenue Service weighed in as early as 2014 (unsurprising, since it couldn’t tax what it hadn’t classified), crypto remained finance’s red-headed stepchild, trotted out as a cautionary tale by institutionalists in academia, media and Wall Street banks, while the Securities and Exchange Commission largely looked away.
Beneath the surface, something shifted during the initial coin offering mania of 2017, when retail investors and contrarian venture capitalists began wetting their beaks in earnest. Even after CME Futures popped that bubble in January 2018, the crypto genie was out of the bottle, as crypto flowed from outsider nations like China and Russia to insider strongholds in America and Europe.
These hodlers and adopters were rewarded during the early COVID-19 bull run, which lifted all crypto boats: exchanges, custodians, utilities and VCs. Then came the deliberate shipwreck, delivered by the “institutionalists”: Former SEC Chair Gary Gensler, former US President Joe Biden and Senator Elizabeth Warren.
Stranded and forgotten, US crypto found a lifeline in August 2023 when Judge Neomi Rao ruled Gensler’s rejection of Grayscale’s exchange-traded fund (ETF) arbitrary and capricious. The dam broke, and by January 2024, spot Bitcoin ETFs had arrived, including one from Larry Fink’s BlackRock.
Bitcoin soon surpassed its 2021 all-time high, the SEC was defanged, and the tide turned decisively against the institutionalists. With retail and tech capital aligned amid a populist surge driven by the nearly 21% of Americans owning crypto, the industry escaped its shipwreck aboard the USS MAGA, sailing triumphantly into Washington to deliver the first pro-crypto administration.
Yet ever-mounting hyperpartisanship means crypto-America is either firmly entrenched in the driver’s seat or careening toward severe whiplash. With Trump’s crypto deals in the spotlight, Wall Street primarily onboard and the archetypal “crypto bro” still reviled by the anti-capitalist left, any boom-and-bust — with scams potentially thriving under a more dovish Trump-controlled SEC — could trigger an unprecedented “Empire Strikes Back” moment from the institutionalists of the Gensler era.
Warren has already tipped her hand, casting Trump’s Qatari jet donation, stablecoin project, Elon Musk and nearly everything else she despises as an elaborate conspiracy — so unfathomably corrupt it would make Victor Lustig blush. If institutionalists like Warren regain power, crypto holders could face severe taxes and crackdowns, fueled by lawfare and messaging targeting the previous administration’s crypto largesse, whether real or perceived.
The dollar dilemma
Conversely, a wildly optimistic bull case — almost embarrassingly bullish — has emerged. Trump’s low-tax “grow your way out of debt” strategy (potentially ballooning national debt from $33 trillion to over $50 trillion), a national Bitcoin Reserve, $1,000 investment accounts for Trump-era newborns and Interior Secretary Doug Burgum’s claims of $100 trillion in public-land assets for potential sovereign debt collateral (or more if America somehow obtains Greenland) place Bitcoin’s multimillion-dollar price targets clearly in view.
Here, Trump — the bankruptcy maestro — maxes out America’s credit as the world rushes into non-existent currency alternatives, sending Bitcoin skyward. Meanwhile, the US, already a leading Bitcoin holder (215,000 BTC, ~1% of total supply), and China (~200,000 BTC) enter a Bitcoin Cold War arms race, skyrocketing crypto into the stratosphere. As Bretton Woods finally falters, the US accumulates hard collateral, positioning itself to renegotiate debts for pennies on the dollar.
On the other side of the oceans, insider nations still follow America’s old guard’s harsh regulatory approach to crypto. The UK is soon implementing 300-British-pound fines per user under the Organisation of Economic Co-operation and Development (OECD)’s Crypto-Asset Reporting Framework (CARF); the EU enacted Markets in Crypto-Assets, legitimizing exchanges under a heavy regulatory burden; Japan intensified oversight, accelerated central bank digital currency (CBDC) efforts and enforced stricter G7 crypto standards; and South Korea implemented rigorous consumer protections and tight regulations. Japan and Korea, with their relatively smaller monetary systems and currency protection concerns, remain notably bearish compared to Europe — which, ironically, once appeared a potential haven for crypto projects just a few years ago, which are now poised to return to the US because of policies it previously pushed, like the Travel Rule. Similarly, in South Korea, lawmakers are currently clashing with the central bank over stablecoin legalization, proposing capital requirements as low as $360,000. The central bank opposes stablecoin legalization due to concerns about maintaining capital controls.
Outsiders on the edge
China, Russia, and developing nations are gaining economic power but still depend on a financial system controlled by Western countries. While they worry about cryptocurrency undermining their control over money flows, they’re also interested in its potential to disrupt the current global financial order. The outsiders — despite their global power — exist outside the US-led global banking system and once balanced the seductive potential of crypto disrupting dollar dominance against the need to safeguard their currencies. While the holy grail of de-dollarization remains central, outsiders have retreated from the now dollar-stablecoin-dominated crypto markets that threaten their monetary policies and geopolitical aims, instead growing the power and influence of BRICS to around 40% of the world population and GDP, with non-USD-based BRICS trade surging from under 35% in 2021 to around 65% using new initiatives like BRICS Pay.
Related: Insiders, Outsiders and Experimenters in Crypto Regulation
China, champion of BRICS and BRICS Pay, experienced the sharpest crypto decline among outsiders. Now, all of East Asia represents only 8.9% of global activity. After banning crypto activities, China aggressively promoted its 2020 state-backed digital yuan initiative to challenge dollar dominance, soaring to nearly $1 trillion (7 trillion yuan) by 2024, with over 180 million users.
Yet despite insider hand-wringing and outsider saber-rattling, neither digital yuan nor BRICS Pay remains a paper tiger to dollar supremacy and stablecoin dominance. No country has a clear path toward the kind of hegemony post-WWII America had at Bretton Woods. So, sadly for China, these initiatives will be hampered by the lack of political unity and will necessary to launch a single dominant currency to compete with the dollar, as poor scalability, limited interoperability among national systems and inadequate cross-border infrastructure continue to undermine these initiatives.
Russia, more to this point, has slowly rolled out a digital ruble to compete with the digital yuan after banning crypto payments but allowing trading in 2020. In 2022, a fracas arose between Russia’s central bank, which sought to ban crypto to protect the ruble from sanction-induced inflation following the Ukraine invasion, and the finance minister, who blocked the move. Instead, Russia legalized crypto mining and authorized crypto use explicitly for cross-border trade, reserving domestic transactions for the still-piloting digital ruble. This paid dividends by 2024, as energy-backed miners generated billions in Bitcoin, while Kremlin-approved entities used crypto to circumvent US sanctions, much to the consternation of the US Department of Justice.
India’s outsider balance has been even less defensive than Russia, with Indian Prime Minister Narendra Modi’s Aadhaar initiative paving the way by boosting digital ID from 60% to 99.9% and bank account penetration from 40% to 96%. India’s balance is legalizing crypto payments while protecting the rupee using heavy crypto taxes — a policy also adopted by fellow BRICS member Brazil, spurring innovation but driving 90% of trading offshore. Still, Coinbase’s approval in March 2025 suggests India will continue cautiously promoting adoption.
This shows that outsiders with lower geopolitical stakes are less protectionist. Brazil formally regulated crypto in 2022 and is considering investing up to $18.5 billion in Bitcoin reserves. Similarly, South Africa licensed crypto exchanges and expanded its Project Khokha CBDC. Meanwhile, Vietnam legalized crypto in June 2025, paving the way for an integrated and regulated crypto ecosystem.
Sovereign innovators and compliance-bound maturers
Yet amid this outsider retreat, a fresh wave of experimenters has emerged. The earlier predecessors, Singapore, Switzerland, Malta and Estonia, now compliance-bound maturers, have surrendered their flexibility to international pressure, like the non-US insiders. Taking their place are the sovereign innovators, led by El Salvador, harnessing crypto’s deflationary potential instead of hiding from it like the outsiders.
In the 2010s, Singapore provided shelter to projects expelled from crypto-hostile Asian nations, while in 2025, crypto ownership plummeted from 40% to 29%. Meanwhile, Switzerland, which birthed Ethereum and gave refuge to blockchain pioneers escaping tightening US and EU regulations, now seeks to comply with them.
Under OECD pressure, Switzerland adopted CARF, pledging to share detailed user data with 74 countries by 2027. Singapore’s formerly flexible regulatory environment hardened significantly under the Financial Services and Markets Act, which introduced stringent licensing and KYC requirements like the dreaded Travel Rule.
Tiny Malta, once a haven for fleeing crypto exchanges, now faces increased EU regulatory scrutiny. At the same time, Estonia slashed licensed crypto firms from 1,200 to just over 100 following an Anti-Money Laundering scandal, increasing capital requirements and enforcing strict Travel Rule compliance.
Yet experimentation has accelerated over the past five years, shifting notably to a group called the sovereign innovators. And no nation has embraced crypto more boldly than El Salvador under President Nayib Bukele, who runs his country like Michael Saylor runs MicroStrategy. After shocking the global establishment by adopting Bitcoin as legal tender in 2021, Bukele doubled down, amassing over 6,000 BTC in sovereign reserves and pioneering geothermal-powered Bitcoin mining using the country’s volcanic energy. By early 2025, El Salvador had licensed Tether to build a comprehensive digital finance ecosystem, proving its crypto ambitions weren’t merely symbolic but foundational.
Other countries are already following Bukele’s lead. Bhutan quietly accumulated $1.5 billion worth of BTC, while Pakistan announced a sovereign Bitcoin reserve last month. Though less daring, Argentina has carved its own sovereign crypto path under President Javier Milei. In 2023, the country saw over $91 billion in crypto inflows — more than any other Latin American nation — primarily driven by stablecoin adoption. While figures on wallet usage vary, Milei’s administration has openly advocated legalizing crypto and even floated the idea of adopting Bitcoin alongside the dollar to help stabilize Argentina’s infamously volatile economy.
Despite the global crypto war between US-led stablecoin aggression and outsider anti-crypto protectionism, the next five years remain unwritten. Ultimately, the winners will be nations agile enough to navigate shifting regulatory tides, leveraging crypto not merely as a financial hedge but as a strategic asset in an emerging multipolar world.
Opinion by: Zack Kelman.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
