Author: Zack Kelman
Five years ago, during our last global cryptocurrency policy classification study, insiders from the International Monetary Fund (IMF) unveiled a stringent new regulatory framework, while the U.S. President publicly discussed cryptocurrency for the first time (albeit with skepticism).
Outsiders began sporadically banning Bitcoin (BTC), exchanges migrated to offshore experimenters like Malta, and cryptocurrency became irreversibly intertwined with global politics.
Since then, the entanglement of cryptocurrency with global politics has only deepened. Just this year, the U.S. dismantled four years of anti-cryptocurrency policy, ushering in a president who campaigned on cryptocurrency—who even created his own meme coin and plans to launch a utility token to power his social media site—while also passing landmark bipartisan stablecoin legislation. In just five years, cryptocurrency has moved from relative obscurity to political hell and back again, especially in the U.S.
How did this happen? The short answer is politics.
For decades, the U.S. maintained its agent banks and dollar clearing monopoly through strict anti-cryptocurrency regulations, particularly the Financial Action Task Force (FATF) travel rule—mandating cryptocurrency companies to know your customer (KYC). But as Americans adopted cryptocurrency and dollar-backed stablecoins reinforced the dollar's dominance, U.S. policy shifted.
Initially, U.S. national politics largely ignored cryptocurrency. Although the IRS intervened as early as 2014 (which was not surprising, as it could not tax what was unclassified), cryptocurrency remained the red-headed stepchild of finance, treated as a cautionary tale by academia, media, and institutionalists on Wall Street, while the U.S. Securities and Exchange Commission (SEC) essentially turned a blind eye.
Beneath the surface, some changes occurred during the 2017 initial coin offering (ICO) frenzy, when retail investors and contrarian venture capitalists began to seriously test the waters. Even after the Chicago Mercantile Exchange futures burst that bubble in January 2018, the genie of cryptocurrency had already escaped the bottle, as cryptocurrency flowed from external countries to internal strongholds in the U.S. and Europe.
These holders and adopters were rewarded during the early bull market of the COVID-19 pandemic, which lifted all cryptocurrency boats: exchanges, custodians, utilities, and venture capital firms. Then came the deliberate sinking, caused by "institutionalists": former SEC Chair Gary Gensler, former U.S. President Joe Biden, and Senator Elizabeth Warren.
The trapped and forgotten U.S. cryptocurrency found a lifeline in August 2023, when Judge Neomi Rao ruled that Gensler's rejection of Grayscale's exchange-traded fund (ETF) was arbitrary and capricious. The dam broke, and by January 2024, spot Bitcoin ETFs were on the way, including one launched by Larry Fink's BlackRock.
Bitcoin quickly surpassed its historical high from 2021, the SEC was defanged, and the tide decisively turned against institutionalists. In a populist wave driven by nearly 21% of Americans holding cryptocurrency, retail and tech capital aligned, and the industry escaped the sinking ship aboard the MAGA battleship, triumphantly sailing into Washington, bringing the first pro-cryptocurrency government.
However, the intensifying bipartisanship means that cryptocurrency in America is either firmly in control or heading toward a severe backlash. With Trump's cryptocurrency trading becoming a focal point, Wall Street's main support, the typical "crypto bros" remain hated by the anti-capitalist left, and any boom and bust—potentially a scam boom under a more moderate SEC controlled by Trump—could trigger an unprecedented "imperial counteroffensive" moment from Gensler-era institutionalists.
Warren has already revealed her cards, portraying Trump's Qatar plane donations, stablecoin projects, Elon Musk, and nearly everything she despises as a carefully orchestrated conspiracy—so corrupt it would make Victor Lustig blush. If institutionalists like Warren regain power, cryptocurrency holders could face severe taxes and crackdowns driven by legal battles and information campaigns against the previous government's generous cryptocurrency policies (whether real or perceived).
Conversely, an extremely optimistic bull market scenario—almost embarrassingly bullish—has emerged. Trump's low-tax "grow your way out of debt" strategy (which could inflate national debt from $33 trillion to over $50 trillion), national Bitcoin reserves, $1,000 investment accounts for Trump-era newborns, and Interior Secretary Doug Burgum's claim of $100 trillion in public land assets as potential sovereign debt collateral (with more if the U.S. somehow acquires Greenland) all clearly lay out Bitcoin's million-dollar price targets.
Here, Trump—the bankruptcy master—maximized U.S. credit as the world rushes toward non-existent currency alternatives, sending Bitcoin soaring. Meanwhile, the U.S. is already the leading Bitcoin holder (215,000 BTC, about 1% of total supply), accumulating hard collateral as the Bretton Woods system finally wobbles, positioning itself to renegotiate debt at a fraction of the dollar.
Across the ocean, internal nations still follow the U.S. old guard's harsh regulatory approach to cryptocurrency. The UK is set to impose a £300 fine on every user under the OECD's Crypto-Asset Reporting Framework (CARF); the EU has enacted crypto-asset market regulations that legalize exchanges under heavy regulatory burdens; Japan has intensified oversight, accelerated central bank digital currency (CBDC) efforts, and enforced stricter G7 cryptocurrency standards; South Korea has implemented strict consumer protections and stringent regulations. Japan and South Korea, due to their relatively small monetary systems and currency protection concerns, remain noticeably bearish compared to Europe—ironically, Europe, which seemed a potential haven for cryptocurrency projects years ago, is now preparing to revert to the U.S. due to policies it previously pushed (like the travel rule). Similarly, in South Korea, lawmakers are currently clashing with the central bank over the legalization of stablecoins, proposing capital requirements as low as $360,000. The central bank opposes stablecoin legalization due to concerns about maintaining capital controls.
Some developing countries are gaining economic strength but still rely on a financial system controlled by Western nations. While they worry that cryptocurrency could undermine control over capital flows, they are also interested in its potential to disrupt the current global financial order. Outsiders—despite having global power—exist outside the U.S.-dominated global banking system, balancing the once-tempting potential of cryptocurrency to disrupt the dollar's dominance with the need to protect their currencies. While the holy grail of de-dollarization remains central, outsiders have retreated from the now dollar-stablecoin-dominated cryptocurrency market, which threatens their monetary policy and geopolitical goals, instead growing the power and influence of BRICS to about 40% of the world's population and GDP through new initiatives like BRICS Pay, with non-dollar-based BRICS trade surging from less than 35% in 2021 to about 65%.
No country has a clear path toward the kind of hegemony the U.S. held in the Bretton Woods system post-World War II. Therefore, these initiatives will be hindered by a lack of political unity and the will required to launch a single dominant currency to compete with the dollar, as poor scalability, limited interoperability between national systems, and insufficient cross-border infrastructure continue to constrain the development of these initiatives.
More critically, after banning cryptocurrency payments but allowing trading in 2020, Russia is slowly rolling out a digital ruble to compete with the digital yuan. In 2022, a dispute arose between the Russian central bank (seeking to ban cryptocurrency to protect the ruble from inflation caused by sanctions following the invasion of Ukraine) and the finance minister (who blocked the move). Instead, Russia legalized cryptocurrency mining and explicitly authorized the use of cryptocurrency for cross-border trade, reserving domestic transactions for the still-piloted digital ruble. This paid off in 2024, as energy-supported miners produced billions in Bitcoin, while Kremlin-approved entities used cryptocurrency to evade U.S. sanctions, frustrating the U.S. Department of Justice.
India's outsiders are even less defensive than Russia's, as Prime Minister Narendra Modi's Aadhaar initiative paved the way by raising digital identity coverage from 60% to 99.9% and bank account penetration from 40% to 96%. India's balance is to legalize cryptocurrency payments while using heavy taxation to protect the rupee—a policy also adopted by BRICS member Brazil, stimulating innovation but pushing 90% of transactions offshore. Nevertheless, Coinbase's approval in March 2025 indicates that India will continue to cautiously promote adoption.
This suggests that outsiders with lower geopolitical stakes are less protectionist. Brazil officially regulated cryptocurrency in 2022 and is considering investing up to $18.5 billion in Bitcoin reserves. Similarly, South Africa licensed cryptocurrency exchanges and expanded its Khokha project CBDC. Meanwhile, Vietnam will legalize cryptocurrency in June 2025, paving the way for a comprehensive and regulated cryptocurrency ecosystem.
However, amid this retreat of outsiders, a new wave of experimenters has emerged. Early pioneers like Singapore, Switzerland, Malta, and Estonia, now mature in compliance constraints, have given up their flexibility under international pressure, just like non-U.S. insiders. Replacing them are sovereign innovators, led by El Salvador, which embraces the deflationary potential of cryptocurrency rather than evading it like outsiders.
In the 2010s, Singapore provided refuge for projects expelled from cryptocurrency-hostile Asian countries, but by 2025, cryptocurrency ownership plummeted from 40% to 29%. Meanwhile, Switzerland birthed Ethereum and provided a haven for blockchain pioneers fleeing increasingly strict U.S. and EU regulations, now seeking to comply with those regulations.
Under OECD pressure, Switzerland adopted CARF, committing to share detailed user data with 74 countries by 2027. Singapore's previously flexible regulatory environment has significantly tightened under the Financial Services and Markets Act, which introduced strict licensing and KYC requirements, such as the dreaded travel rule.
Once a haven for fleeing cryptocurrency exchanges, Malta now faces increased scrutiny from EU regulators. Meanwhile, Estonia has reduced licensed cryptocurrency companies from 1,200 to just over 100 after an anti-money laundering scandal, increasing capital requirements and enforcing strict travel rule compliance.
However, experimentation has accelerated over the past five years, significantly shifting toward a group known as sovereign innovators. No country has embraced cryptocurrency more boldly than El Salvador under President Nayib Bukele, who runs the nation like Michael Saylor runs Strategy. After shocking the global establishment by adopting Bitcoin as legal tender in 2021, Bukele doubled down, accumulating 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 establish a comprehensive digital financial ecosystem, proving that its cryptocurrency ambitions are not merely symbolic but foundational.
Other countries are following Bukele's lead. Bhutan has quietly accumulated $1.5 billion worth of BTC, while Pakistan announced sovereign Bitcoin reserves last month. Although less bold, Argentina is carving out its own sovereign cryptocurrency path under President Javier Milei. In 2023, the country saw over $91 billion in cryptocurrency inflows—more than any other Latin American country—primarily driven by stablecoin adoption. While data on wallet usage varies, the Milei government has publicly advocated for the legalization of cryptocurrency and even proposed the idea of adopting Bitcoin alongside the dollar to help stabilize Argentina's notoriously turbulent economy.
Despite the global cryptocurrency war between U.S.-led stablecoin aggression and outsider anti-cryptocurrency protectionism, the next five years remain uncertain. Ultimately, the winners will be those countries agile enough to respond to the shifting regulatory tides, viewing cryptocurrency not only as a financial hedge but also as a strategic asset in an emerging multipolar world.
Author: Zack Kelman.
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This article is for general informational purposes only and is not intended to be and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Original: “Insiders, Outsiders, and Experimenters: Analyzing the New Landscape of Global Crypto Policy”
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