IV · Money & Power
Money has always been an instrument of the state. A technology built to be stateless was therefore destined to collide with the most sovereign thing there is — and the collision is already reshaping dollar power, financial surveillance, and the contours of the monetary order itself.
Money and Power
Money has always been an instrument of the state, not merely a medium of the market. The earliest coins bore the faces of kings for a reason: to spend was to circulate the sovereign's authority, and to accept was to acknowledge it. A government that issues the unit of account decides what taxes are paid in, what debts are enforceable, and what counts, legally, as final settlement. It can inflate the currency to fund a war, freeze an account to punish a dissident, and read the ledger to find one. Control of money is not a byproduct of political power. For most of recorded history it has been among its foundations.
Cryptocurrency was conceived as a deliberate exception to this arrangement. Its founding premise was that a monetary system could be run by rules rather than by rulers — that issuance could follow a fixed schedule no official could override, and that settlement could be final without any authority's permission. This is a stateless money in the most literal sense: it has no capital, no central bank, no borders it recognizes. The interesting question was never whether such a thing could be built. It plainly could. The question is what happens when a technology designed to be indifferent to states meets the one thing states have always guarded most jealously.
Money is the state's oldest technology, and crypto is the first serious attempt to build money the state did not issue.
The collision has not produced the clean outcome either side expected. The libertarian forecast — that sovereign money would wither in the face of a superior, uncontrollable alternative — has not come to pass. Nor has the statist forecast, that governments would simply crush what they could not control. What has emerged instead is stranger and more consequential: a set of accommodations, appropriations, and quiet reversals in which the technology reshapes state power even as states reshape the technology. To understand where trustless money is heading, one has to look at how the great powers have chosen to meet it.
The Dollar and the Token
The most widely held assumption about crypto and geopolitics is that it poses a threat to American monetary dominance — a decentralized escape hatch from a dollar-based order. The evidence points, counterintuitively, in the opposite direction. The dominant application of blockchain technology to date is not a rival to the dollar but a new distribution channel for it. Dollar-pegged stablecoins, tokens that hold a dollar in reserve for each unit issued, have become the settlement layer of the crypto economy and, increasingly, a parallel dollar system for anyone with a phone.
Consider what a stablecoin actually does. It takes the world's most trusted unit of account and makes it available, permissionlessly, to a saver in Lagos or Buenos Aires who could never open a US bank account. It moves that dollar across borders in seconds for cents, outside the correspondent banking network that Washington already dominates. The demand this creates does not flow to the euro, the yuan, or gold. It flows to the dollar — and, crucially, to dollar-denominated assets. To hold their pegs credibly, the largest issuers park their reserves in short-dated US Treasury bills, which has made them, collectively, among the more significant private buyers of American government debt. A technology imagined as a challenge to the dollar has instead become a mechanism for exporting digital dollars and financing the American state.
The dollar did not need saving from crypto. It needed faster rails, and the market built them.
Washington has begun to grasp the strategic logic. A dollar that lives natively on open networks extends its reach into economies where physical cash and formal banking never penetrated, entrenching the greenback among a generation that may never touch a US institution directly. This is soft power of an unusually durable kind. But the same mechanism carries a subtler cost, and it is not America's to bear. When citizens of a fragile economy can hold digital dollars as easily as their own currency, that country's central bank loses a measure of monetary sovereignty. The dollar's digital extension is, for the United States, an asset; for much of the rest of the world, it is a quiet erosion of the ability to run an independent monetary policy at all.
The American Arc
For a decade the United States governed crypto largely by ambiguity. Two agencies claimed overlapping authority: the Securities and Exchange Commission, which viewed most tokens as unregistered securities, and the Commodity Futures Trading Commission, which treated the largest assets as commodities. The turf war was never resolved, and into the vacuum stepped a doctrine critics called regulation by enforcement — the practice of establishing the rules retroactively, through lawsuits, rather than through legislation an industry could read in advance.
At the center sat a case from 1946. In SEC v. W.J. Howey Co., the Supreme Court defined an "investment contract" as an investment of money in a common enterprise with an expectation of profit derived from the efforts of others. The resulting Howey test became the instrument by which the SEC argued that most tokens were securities sold in violation of law. Whether a sufficiently decentralized network could ever escape that definition — whether a token could start as a security and become something else — was litigated for years without a clean answer.
The 2024–2025 period marked a sharp political pivot. The approval of spot Bitcoin exchange-traded funds in January 2024, followed by Ether products, brought the asset class inside the regulated financial system through its most conventional door. A newly sympathetic Washington moved from enforcement toward legislation. Congress advanced a dedicated framework for dollar stablecoins — the GENIUS Act, establishing reserve, disclosure, and licensing rules for issuers — alongside broader market-structure efforts to divide authority cleanly between the SEC and the CFTC. The executive branch went further still, moving to establish a strategic Bitcoin reserve built initially from tokens already seized by the government, an idea that would have seemed fantastical a few years earlier.
It is worth being sober about what this represents. The pivot is a bet that the technology is now large and legitimate enough to be domesticated on American terms rather than resisted — that it is better to write the rules for digital dollars than to cede that ground offshore. Whether it proves a durable settlement or a cyclical enthusiasm will depend on institutions that outlast any single administration.
China's Two Tracks
Beijing offers the sharpest contrast, because it has pursued two seemingly opposite policies at once. In 2021 China completed a comprehensive prohibition of private cryptocurrency, declaring all related transactions illegal and driving out the mining industry that had once made the country the center of Bitcoin's global network. The rationale was consistent with everything the state believes about money: an ungovernable, pseudonymous, capital-flight-enabling instrument was intolerable to a system built on capital controls and financial surveillance.
Yet in the same years, China pressed forward more aggressively than any major economy on a digital currency of its own. The e-CNY, or digital yuan, is a central bank digital currency piloted across dozens of cities and showcased to international visitors at the 2022 Winter Olympics. It is, in a sense, the photographic negative of Bitcoin. Where crypto is permissionless, the e-CNY is permissioned to its core; where crypto is pseudonymous, the e-CNY is designed to give the state a clear view of transactions; where crypto's supply is fixed by code, the e-CNY's is set by policy and can, in principle, be programmed — money that could carry expiry dates or spending restrictions written into the unit itself.
Two digital monies, mirror images: one built so no one can control it, the other so the state controls everything about it.
The two tracks are not a contradiction but a coherent thesis. China has concluded that money's move onto digital rails is inevitable, and that the strategic question is who holds the switch. Its answer is an unambiguous vision of digital money as an instrument of state capacity — more legible, more controllable, and more responsive to policy than physical cash ever was. This is the deeper geopolitical divide the technology has exposed. It is not merely dollar versus yuan. It is a contest between two philosophies of what digital money is for: an open network that constrains the state, or a programmable ledger that empowers it.
Sanctions and Neutrality
The word that carries the ideological weight in this technology is permissionless — the claim that no authority can prevent a valid transaction from settling. The real test of that claim came not from a market crash but from a sanctions list. In August 2022, the US Treasury's Office of Foreign Assets Control sanctioned Tornado Cash, a piece of autonomous software that mixed transactions to obscure their origin. It was an unprecedented act: not a person or a company, but code — a set of immutable smart contracts running on a public network — was placed on the sanctions list, making it a crime for Americans to interact with it.
The episode forced a question the industry had largely avoided. Neutral infrastructure and compliant infrastructure are not the same thing, and one cannot fully be both. After Ethereum's transition to proof of stake, a substantial share of the validators processing transactions chose, for legal safety, to exclude the sanctioned addresses — censorship not by the protocol but by the operators running it. The network remained technically permissionless while becoming, at the margin, practically filtered. This is the tension in miniature: a system's credible neutrality is only as strong as the willingness of its participants to process transactions they would rather not.
The story did not end with the sanction. The Tornado Cash designation was challenged in court, and a US appeals court later found that Treasury had overstepped by sanctioning immutable software that no one controls, leading to the measure's eventual removal. The reversal matters less for the specific tool than for what it clarified. Governments will reach for the levers of financial exclusion they have always used, and open networks will resist being reduced to those levers — not always successfully, and not without cost. Between compliant plumbing and credible neutrality lies the unresolved political core of the entire project.
The Global South
In the wealthy world crypto is largely a speculation, an asset traded for gain. Across much of the global South it is something else: a tool used because the alternatives have failed. The pattern recurs wherever a national currency loses the public's trust. In Argentina, decades of inflation have taught citizens to convert pesos into dollars the moment they arrive, and dollar stablecoins have become a way to hold that dollar without a foreign bank account or a black-market exchange. In Nigeria, a young population and a devaluing naira have driven some of the world's highest volumes of peer-to-peer trading, often in the face of official restriction. In Lebanon, the collapse of the banking system after 2019 left savers locked out of their own deposits, and self-custodied crypto offered an exit the banks could not block. In Venezuela, years of hyperinflation made the national currency a joke long before the state's own failed attempt at a crypto token.
What these cases share is not enthusiasm for a new technology but a shortage of trustworthy money. The uses are mundane and human: a worker abroad sending remittances home without surrendering a tenth of the sum to intermediaries; a family preserving savings against a currency that loses value by the week; a small business settling with a foreign supplier when the formal channels are closed. For these users, "trustless" is not an ideology. It is a practical description of a currency their own government has given them no reason to trust.
- The humanitarian case is real: dollar access, cheaper remittances, and savings that survive an inflation the state cannot or will not control.
- The illicit case is also real: the same properties that route around capital controls route around sanctions, and pseudonymity that shelters a dissident shelters a fraudster too.
Honesty requires holding both at once. The properties that make crypto liberating in a failing economy are precisely the properties that make it useful to those evading law elsewhere; they cannot be separated at the level of the protocol, only judged case by case. A serious account of this technology's geopolitics must resist both the promotional story, in which it only banks the unbanked, and the security story, in which it only launders and evades. It does both, and where the balance falls depends far more on the surrounding institutions than on the code.
The Endgame
Three visions of the monetary future are now competing, and the technology examined here is central to each. They are not merely three products. They are three theories of the relationship between money and power, and they cannot all prevail.
The first is state programmable money. In this future the decisive innovation is not decentralization but the digitization of the sovereign currency itself — central bank digital currencies that give governments a real-time view of the economy and the ability to write policy directly into the unit of account. This is money as an instrument of state capacity, most fully articulated in China's e-CNY, and its appeal to governments everywhere is obvious. Its risk is equally obvious: a monetary system that can be programmed to permit and forbid is a system of control finer than cash ever allowed.
The second is the neutral reserve asset — the thesis that Bitcoin's enduring role is not as everyday money but as digital gold, a scarce, apolitical store of value for a multipolar world. As no single power's dominance goes unchallenged and sanctions turn reserves into liabilities, the argument runs, states and institutions will want a reserve asset that belongs to no rival. This vision asks little of the technology except that it remain credibly neutral and genuinely scarce, which is also its wager: that neutrality can survive contact with the powers that would prefer to control it.
The third is the stablecoin order, and it is the one quietly winning on the ground. In this future the blockchain's main contribution is not to replace the dollar but to distribute it — to become the low-cost, global, always-on rails on which digital dollars reach billions of phones. It extends American monetary primacy rather than ending it, and it is the vision most compatible with the interests of the world's incumbent power, which is much of why it is advancing fastest.
The question was never whether the state would meet stateless money. It was which of them would be changed more by the encounter.
These futures are not mutually exclusive in the short run; the likelier outcome is an uneasy coexistence, with programmable state currencies at home, stablecoin dollars abroad, and a neutral reserve asset held at the edges as insurance against all of it. But they point in incompatible directions, and the direction that ultimately dominates will decide whether this technology becomes the finest instrument of monetary control ever built or the first credible limit on it. A tool designed to be stateless has not escaped the state. It has forced the state to choose what kind of money it wants to be — and, in doing so, has made the oldest question about money new again.