Authored by: Zack Kelman
Five years ago, coinciding with our prior Comprehensive Crypto Policy Review, key individuals within the International Monetary Fund revealed a stringent new regulatory approach just as the US president commented publicly, though cautiously, on digital assets for the first time.
Simultaneously, certain nations initiated outright bans on Bitcoin (BTC), leading exchanges to migrate to more welcoming jurisdictions like Malta, as cryptocurrency became inextricably linked to the world of international politics.
The connection between crypto and global affairs has only intensified since then. This year alone, the United States reversed previous restrictive policies, inaugurated a president who incorporated crypto into his campaign—even launching a memecoin and planning a utility token for his social media platform—and enacted significant bipartisan legislation concerning stablecoins. Within a mere half-decade, the narrative around cryptocurrency in the US has undergone a dramatic transformation, oscillating from relative obscurity to intense political scrutiny and back.
The driving force behind this shift? Simply put, politics.
The US’s Shifting Stance on Crypto
For many years, the US employed rigorous anti-crypto regulations, especially those associated with the Financial Action Task Force’s Travel Rule (requiring crypto firms to implement Know Your Customer (KYC) protocols), to protect its control over correspondent banking and dollar-denominated transactions. However, US policy began to adapt as cryptocurrency adoption increased among Americans and stablecoins backed by the dollar served to reinforce the dollar’s position.
Initially, national political discourse in America paid little attention to cryptocurrency. While the Internal Revenue Service offered opinions as early as 2014 (predictably, given its need to classify assets for taxation), crypto was largely viewed as an unorthodox investment, often cited negatively by academic and financial figures, while regulatory bodies like the Securities and Exchange Commission largely remained inactive.
Behind the scenes, the ICO boom of 2017 sparked a turning point, with individual investors and venture capitalists beginning to actively participate. Even after CME Futures caused a market correction in January 2018, crypto’s influence grew, as cryptocurrency flowed from nations with stricter regulations like China and Russia toward the US and Europe.
These early adopters and investors benefited during the initial COVID-19 market surge, which positively impacted all aspects of the crypto landscape: exchanges, custodians, utilities, and venture capital firms. Subsequently, a deliberate attempt to destabilize the market emerged, led by individuals often described as “institutionalists,” including former SEC Chair Gary Gensler, former US President Joe Biden, and Senator Elizabeth Warren.
Facing adversity, the US crypto community found renewed hope in August 2023 when Judge Neomi Rao deemed Gensler’s rejection of Grayscale’s ETF unreasonable. This decision paved the way for the arrival of spot Bitcoin ETFs by January 2024, including one from BlackRock under Larry Fink.
Bitcoin soon surpassed its 2021 peak, the SEC faced reduced authority, and the “institutionalists” began to lose ground. With aligned retail and tech investment amid growing public support, fueled by the fact that nearly 21% of Americans own crypto, the industry recovered and pushed for a more crypto-friendly administration in Washington.
However, increasing political polarization introduces uncertainty. Crypto could solidify its position or experience a reversal. Scrutiny of Trump’s crypto-related activities, ongoing Wall Street involvement, and persisting negative perceptions of the “crypto bro” stereotype could lead to a renewed backlash from institutional forces similar to the Gensler era if a boom-and-bust cycle occurs or scams proliferate.
Warren has already voiced her concerns, describing Trump’s actions, including his Qatari jet donation, stablecoin project, association with Elon Musk, and broader agenda, as an elaborate and corrupt scheme reminiscent of historical scams. Should figures like Warren regain power, crypto holders could face significant tax increases and regulatory actions targeting the previous administration’s crypto initiatives, both real and perceived.
The Dollar Conundrum
Conversely, an optimistic outlook suggests significant gains. Trump’s emphasis on economic growth through tax reductions (potentially increasing the national debt from $33 trillion to over $50 trillion), the creation of a national Bitcoin Reserve, investment accounts for newborns, and assertions regarding public land assets for debt collateral could push Bitcoin’s value toward multi-million-dollar targets.
Here, Trump leverages America’s financial standing as the world seeks alternative currencies, driving Bitcoin’s price upward. Meanwhile, the US (already a major Bitcoin holder with 215,000 BTC, approximately 1% of the total supply) and China (around 200,000 BTC) engage in a Bitcoin “Cold War,” pushing crypto’s value to unprecedented heights. As the existing Bretton Woods system weakens, the US accumulates assets, positioning itself to renegotiate debts favorably.
In contrast, nations globally still adopt stringent regulatory approaches to crypto. The UK will soon impose penalties under the OECD’s CARF; the EU implemented MiCA, regulating exchanges; Japan enhanced monitoring, advanced its CBDC, and enforced stricter crypto standards; and South Korea strengthened consumer protection and regulation. Japan and Korea are more bearish compared to Europe, which had once appeared a crypto haven but now may return to US policies like the Travel Rule. Similarly, in South Korea, lawmakers are in conflict with the central bank regarding stablecoin legalization, proposing capital requirements as low as $360,000. The central bank opposes the legalization due to concerns regarding maintaining capital controls.
Outsiders on the Sidelines
China, Russia, and other developing economies are growing in influence but remain dependent on the Western-controlled financial system. They acknowledge crypto’s potential to disrupt the existing order, yet worry about losing control over their monetary flows. These “outsider” nations, despite their geopolitical significance, are excluded from the US-led system and weigh the potential benefits of crypto weakening the dollar against protecting their currencies. While de-dollarization remains a goal, outsiders have stepped back from the stablecoin-dominated crypto markets that affect their policy, focusing instead on the BRICS alliance, which represents approximately 40% of the global population and GDP. Non-USD-based BRICS trade has increased from under 35% in 2021 to around 65% using new systems like BRICS Pay.
Related: Insiders, Outsiders and Experimenters in Crypto Regulation
China, a key proponent of BRICS and BRICS Pay, has experienced the most significant crypto decline among outsiders. East Asia now accounts for only 8.9% of global crypto activity. After banning crypto, China prioritized its digital yuan initiative to challenge the dollar, which reached nearly $1 trillion (7 trillion yuan) by 2024 with over 180 million users.
However, neither the digital yuan nor BRICS Pay has seriously challenged the dollar and stablecoin dominance. No country has the leverage America had post-WWII at Bretton Woods. These initiatives are hindered by political divides and scalability problems.
Russia has introduced a digital ruble to compete with the yuan, banning crypto payments but allowing trading in 2020. In 2022, a conflict arose between the central bank (which sought to ban crypto to protect the ruble from inflation after the Ukraine invasion) and the finance minister (who opposed the ban). Instead, Russia legalized crypto mining and permitted crypto for cross-border transactions, using the digital ruble domestically. By 2024, energy-backed miners generated billions in Bitcoin, and entities used crypto to bypass US sanctions, much to the displeasure of the US Department of Justice.
India’s approach is more moderate. The Aadhaar initiative increased digital ID usage and bank account penetration. India allows crypto payments while protecting the rupee through taxes, a policy also adopted by Brazil, driving trading offshore. However, Coinbase’s approval in March 2025 indicates India will cautiously promote adoption.
Outsiders with less geopolitical risk are less protectionist. Brazil regulated crypto in 2022 and is considering investing in Bitcoin reserves. South Africa licensed exchanges and expanded its CBDC project. Vietnam legalized crypto in June 2025, enabling a regulated ecosystem.
Sovereign Innovators and Compliance-Driven Nations
Alongside the outsider retreat, a new group of experimenters has emerged. Singapore, Switzerland, Malta, and Estonia, now compliance-focused, have lost their flexibility due to international pressure. The “sovereign innovators,” led by El Salvador, are embracing crypto’s deflationary potential.
In the 2010s, Singapore provided refuge to projects from restrictive Asian countries, while in 2025, crypto ownership declined. Switzerland, where Ethereum was created, now seeks compliance.
Under OECD pressure, Switzerland adopted CARF, sharing user data with 74 countries by 2027. Singapore’s regulatory environment tightened under the Financial Services and Markets Act, introducing licensing and KYC requirements.
Malta, once a crypto haven, faces EU scrutiny. Estonia reduced licensed crypto firms following an AML scandal, increasing capital requirements and enforcing Travel Rule compliance.
Experimentation has shifted to sovereign innovators. El Salvador, under President Nayib Bukele, has embraced crypto, adopting Bitcoin as legal tender in 2021, amassing BTC reserves, and using geothermal energy for mining. By early 2025, El Salvador licensed Tether to build a digital finance ecosystem.
Other countries follow Bukele’s lead. Bhutan accumulated BTC, and Pakistan announced a Bitcoin reserve. Argentina, under President Javier Milei, saw significant crypto inflows, especially in stablecoins. Milei’s administration has advocated legalizing crypto and adopting Bitcoin to stabilize its economy.
Despite the global crypto war, the next five years are uncertain. The winners will be nations that can adapt to changing regulations, using crypto as a strategic asset.
Authored by: Zack Kelman.
This information is intended for general awareness only and should not be interpreted as professional legal or financial advice. The opinions expressed are solely those of the author and do not necessarily reflect the views of Cointelegraph.
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