Arthur Hayes' new article: Beyond Bitcoin national reserves, US crypto hegemony has other ambitions
TechFlow Selected TechFlow Selected
Arthur Hayes' new article: Beyond Bitcoin national reserves, US crypto hegemony has other ambitions
Anything that can be bought can also be sold.
Navigating Web3 tides with focused insightsAuthor: Arthur Hayes
Compiled by: TechFlow
(The views expressed in this article are solely those of the author and should not be taken as investment advice, nor should they be construed as recommendations or encouragement to engage in any investment transactions.)
The Pax Americana Make-A-Wish Corporation at Mar-a-Lago welcomes a constant stream of "wish-makers" every day. People from the crypto world join others in long queues, hoping to fulfill one or more wishes. The capricious "genie"—the so-called "Orange Man"—holds court each week at his country-club-meets-nightclub private compound in South Florida, surrounded by fawning followers and the soundtrack of 1980s pop hits.
The genie himself is neither good nor evil; what truly matters is whether the wish-maker’s desire is reasonable. Every culture has moral tales about "wrong wishes," where attempts to shortcut success, wealth, or personal happiness often lead to unintended consequences.
The core message of these stories is: There is no “shortcut button” in life—everything valuable comes from effort and sacrifice.
In the global cryptocurrency industry, two prominent "wishes" deserve discussion—one being the establishment of a Bitcoin Strategic Reserve (BSR), and the other pushing for Pax Americana-style crypto regulation. Broadly speaking, many in the crypto space hope the U.S. government will print money to buy Bitcoin as part of national reserves, while also creating favorable regulatory moats for their crypto-related businesses. I believe these are misguided goals. We should choose a harder but more meaningful path—making requests to the "genie" that even the next administration (regardless of party) cannot easily undo.
In the first part of this article, I will argue why both BSR and patchwork crypto regulations would harm the industry's development, both locally and globally. Then, I’ll offer advice to those who line up daily in pinstriped suits or summer dresses, waiting to make wishes to this "Orange Genie," on what more valuable wishes they should actually ask for.
Bitcoin Strategic Reserve (BSR)
Anything that can be bought can also be sold. When governments accumulate an asset, the central issue is that such buying and selling is usually driven by politics, not economics. Within today’s global economic framework, does Bitcoin serve any direct function for the U.S. government? No. Bitcoin is simply another financial asset. While some readers may view Bitcoin as “the hardest money in history,” created by the “one true god” Satoshi Nakamoto, I can assure you the “genie” (referring to political figures) doesn’t act out of religious devotion, but rather to please the electorate that placed him in power.
Suppose Trump successfully establishes a Bitcoin Strategic Reserve (BSR), purchasing one million Bitcoins as proposed by Senator Lummis. What happens then? Bitcoin’s price surges rapidly, markets go euphoric—but once the government finishes buying, the “only up” narrative abruptly ends.
Fast forward two to four years. By 2026, voters may grow disappointed with Trump over uncontrolled inflation, endless wars, food safety issues, or government corruption, potentially allowing Democrats to regain power. What if they gain enough seats in the House to override presidential vetoes? Suppose by 2028, a Democratic president like Gavin Newsom rises to power in a “phoenix-like” resurgence. Meanwhile, controversial policies such as allowing minors to undergo gender transition without parental consent might return—something certain voters may cheer.
For an incoming Democratic-led government, finding immediate funds to satisfy its supporters becomes a top priority. This isn’t unique to Democrats—any party faces similar pressures. At this point, the government’s Bitcoin reserve—one million coins sitting idle—becomes a tempting “ATM.” Markets will naturally worry about when and how these Bitcoins will be sold. Will the government minimize market impact and maximize dollar returns, or deliberately dump them to punish crypto holders who supported the “Orange Man” for political reasons? We don’t know. But this uncertainty would severely damage market confidence in Bitcoin and the broader crypto industry.
If the U.S. government decides to hoard “shitcoins”—including Ripple—these cryptocurrencies will inevitably become powerful political tools. Yet, as a purely political strategy, would the U.S. government genuinely engage with the crypto community? Would they fund Bitcoin Core developers? Run Bitcoin nodes? Maybe… but current BSR discussions suggest it’s more of a “buy and forget” plan. Trump and Republicans might see Bitcoin prices soar, declare “mission accomplished,” and use $10,000-per-plate dinners to raise more campaign cash from David Bailey. Don’t blame the players—blame the game. However, making such a wish to the “genie” could bring unnecessary pain to the crypto industry within two years.
Frankenstein-Style Crypto Legislation
The easiest way to understand what a Hodler wants in regulation is to look at their portfolio. From my vantage point far from the noise around the “genie,” those heavily invested in centralized crypto financial intermediaries are most likely to get their regulatory wishes granted—simply because they’re the loudest. Unfortunately, developers building truly decentralized technologies and applications lack sufficient capital to play the political game in this cycle. Today’s wealthiest crypto players typically control exchanges, brokerage services, or lending platforms.
Thus, if crypto regulatory wishes are fulfilled, they may take the form of complex, highly prescriptive laws that only well-funded, large centralized firms can afford to comply with. Why? Because the only people who can interpret these laws are corporate lawyers who shuttle between regulatory agencies—and they don’t come cheap, charging up to $2,000 per hour. Maybe that’s “bargain pricing” in Dubai, but to me, it’s expensive.
Is this really what the broader crypto community wants from the “genie”? Is all this just to make Brian Armstrong and Larry Fink richer? I’m not criticizing them—they’re doing their jobs well, building monopolies to maximize shareholder value and stand out. Perhaps Coinbase and BlackRock shareholders do want such a Frankenstein-style crypto bill. But in my view, such regulations won’t change the industry’s fundamental structure. While not directly harmful, they’re certainly not beneficial either.
To entrepreneurs considering relocation due to the belief that the U.S. now has a “crypto-friendly” government: think twice. If you accept this setup, your startup is likely doomed. Monopolies protected by complex regulatory barriers have zero interest in real innovation. They’ll use their privileged status to shut out potential competitors. You might arrive at JFK in business class, but you’ll probably leave in economy.
Make a Wish
If I were to make a wish, what would it be? I’ll tell you. But in my style, before revealing it, we must first revisit financial history and interpret key events through my lens.
The core question is: Why would the “genie” grant my wish—or at least a close variant? The genie and those actually running the country will only agree if my wish helps achieve their goals.
Trump’s two key aides—Treasury Secretary Scott Bessent and Secretary of State Mark Rubio—aim to reform the global economic order to consolidate dollar dominance and maintain American hegemony. As I wrote in my previous article The Ugly, the dollar system consists of two parts: a currency and a reserve asset. Since the 1944 Bretton Woods agreement, the dollar has been the global reserve currency, but the nature of reserve assets has evolved over time.
Evolution of Dollar System Reserve Assets
-
1944–1971: Gold
During this period, the dollar was pegged to gold at $35 per ounce. Sovereign nations allied with Pax Americana could exchange dollars for gold at this rate.
-
1971–1994: Oil
To finance the Vietnam War and President Lyndon B. Johnson’s expansive social programs, President Richard Nixon ended the gold standard. Reserve assets shifted to petrodollars. Saudi Arabia became the first country to explicitly price oil in dollars, reinvesting surplus dollars into U.S. Treasuries. This allowed the U.S. Treasury to issue bonds backed implicitly by oil flows from the world’s largest marginal oil producer.
-
1994–2025: Foreign Exchange Reserves of Exporting Nations
In the 1980s, the U.S. boosted economic resilience through increased oil production and energy efficiency. Meanwhile, the rise of China and Asia’s “Four Asian Tigers” (South Korea, Taiwan, Japan, Malaysia, Thailand) enabled ultra-low-cost manufacturing for Western consumers. In 1994, China devalued the yuan significantly, formally joining the global mercantilist race to export for foreign reserves. These exporting nations gained access to vast Western consumer markets on condition they price goods in dollars and invest dollar surpluses in U.S. Treasuries.
-
2025–Future: Bitcoin/Gold
China, however, refuses to remain subordinate within the Pax Americana system. For China, the 20th century was a “century of humiliation,” marked by unequal treaties under weak Qing emperors, followed by two world wars and a civil war. Before Europe’s Renaissance, China was the world’s largest economy. Thus, the Chinese Communist Party (CCP) sees “national rejuvenation” as its core mission. In truth, “Make America Great Again” (MAGA) isn’t uniquely American—China has pursued its own revival since 1949.
To achieve this, China successfully transformed from a low-cost, low-quality manufacturer into a low-cost, high-quality producer. Yet, when Chinese leaders realized that buying more U.S. Treasuries only deepened their role as a secondary power under American dominance, they stopped accumulating them. Previously, every dollar of export surplus was expected to buy an equivalent amount of U.S. debt. But according to public data from the past 12 months, while China earned $1 trillion in export surplus, its U.S. Treasury holdings decreased by $14 billion.
This trend has caught the attention of other exporting nations. Among fast-growing Global South countries, most now trade more with China than the U.S., though trade is still mostly dollar-denominated. “De-dollarization” doesn’t mean abandoning the dollar entirely, but investing surpluses in non-Pax Americana-dominated assets like Bitcoin and gold—a sign of potential global economic transformation.
Trump’s aides face a tough challenge: they need to design a new system that preserves the dollar as the primary global trade currency while finding a suitable reserve asset to sustain the U.S. Treasury market. If they’re truly capable, they might even reduce the U.S. public debt-to-GDP ratio to around 30%—the level seen in 2000.
Yet global markets no longer see U.S. Treasuries as reliable savings vehicles. This is precisely why a “neutral reserve asset” is needed. No nation wants to replace the dollar with its own currency, as the decline of Pax Americana is already evident—driven by economic imbalances stemming from dollar dominance as the global reserve currency.
Before discussing my wish, let me address how a top-tier TradFi money market strategist views this problem.
DeepSeek
Zoltan Pozsar, formerly of the Dallas Fed and Credit Suisse, now writes a blog widely followed by Pax Americana financial elites. His solution (which I’ll detail shortly) may be implemented, so it’s worth examining. But I’ll also highlight where I disagree. Ultimately, I believe his approach fits the 1980s better than 2025.
Many believers in “American exceptionalism” imagine reclaiming Pax Americana’s power and prestige like a Top Gun movie scene—Tom Cruise effortlessly defeating Russian and Chinese rivals in an F-14. But this thinking is clearly flawed.
A more accurate analogy lies in the recent Top Gun sequel, slightly modified. Replace the nearly $75 million F-18 fighter jet with Iran’s Shahed drone, priced at just $50,000 and widely sold across the Global South. Tom Cruise, now over 60, pilots these prohibitively expensive jets, while his opponents deploy swarms of AI-linked drones costing a fraction. In Ukraine, both Russia and the U.S. have witnessed how 20th-century weaponry is powerless against modern drone warfare.
This brings us to DeepSeek. If you’re too immersed in TikTok, you may not know that DeepSeek is a revolutionary AI large language model (LLM). It performs on par with ChatGPT or Claude, yet costs 95% less to train. More importantly, it’s open-source. To date, no tech CEO—neither NVIDIA’s Jensen Huang nor Microsoft’s Satya Nadella—has challenged its performance claims or cost efficiency.
The significance of DeepSeek lies in its origin: developed by a Chinese hedge fund professional from Hangzhou. Amid U.S. economic sanctions restricting China’s access to high-performance semiconductors, the American logic assumed Chinese entrepreneurs couldn’t train or deploy LLMs competitive with those powered by U.S. chips. DeepSeek shattered the entrenched belief that “whoever spends the most wins.” Once again proving the old adage: “Necessity is the mother of invention.” Even under sanctions, a 200-person Chinese startup team achieved breakthroughs through sheer determination. If you can’t destroy Chinese production via ground war, perhaps the era of American exceptionalism is truly ending. Being an ordinary nation isn’t bad—unless your entire national identity rests on fictional superiority and believing you’re inherently better just because you were born in “America.”
When non-American elites feel inherently inferior, they tend to obey. This psychology allows American financial elites to dominate global policy—dictating which currencies nations use in trade and how they invest surpluses. But if non-Americans realize their equality with Americans, they may stop blindly following U.S. diplomats. This is crucial for Zoltan’s policy suggestions, which rely on bilateral cooperation. If Bessent demands compliance, a nation’s treasury may obey—but if it refuses, the whole plan collapses. This is the fatal flaw in Zoltan’s proposal.
Zoltan’s goal aligns with mine: reducing the real value of U.S. Treasuries. He also correctly notes that the U.S. must extend debt duration and reduce interest payments. Suppose Bessent wants to cut the debt-to-GDP ratio from 100% to 30%. If GDP stays flat, the real value of debt must fall by 70%. Zoltan’s core idea: require foreign creditors to swap short-term Treasuries for 100-year bonds. These century bonds are non-tradable, but if a creditor needs cash, the U.S. will repurchase them at face value.
Here’s how it works:
Suppose you’re a Southern nation (a derogatory term) holding a 10-year U.S. Treasury bond with a $100 face value.
-
Per Bessent’s request, you must swap this 10-year bond for a zero-coupon 100-year bond (a “century bond”). The market value of this century bond is only $30, though its face value remains $100. For simplicity, I’ve simplified the bond math. A longer-term, zero-coupon bond inherently has lower intrinsic value than a shorter-term, coupon-paying one.
-
Through this swap, the real value of your debt is reduced by 70%, though the face value stays at $100.
-
If you’re a “compliant ally” (e.g., Europe… somewhat unreliable) or a “loyal vassal” (e.g., Philippines… Europe might qualify too), you can contact the Fed anytime to redeem the century bond for $100 in cash, with no fees. For instance, when buying oil from Saudi Arabia, though the bond’s market value is only $30, the Fed will exchange it for $100 today, interest-free.
-
But from now on, any dollar surplus you earn can only be reinvested in future century bonds. You’re barred from buying any other financial assets.
This deal has pros and cons. The downside: your debt’s real value is slashed by 70%, devastating your national savings. Worse, you’ve agreed to receive liquidity only from the issuer—the Fed—not through free global market trading. On the upside, if you “behave,” the Fed offers interest-free loans at face value.
The benefit is entry into Pax Americana’s circle of shared prosperity. The penalty? Refuse, and your exports face punitive tariffs or outright bans, plus denial of U.S. weapons for domestic or foreign conflicts.
Several factors may prevent many nations from accepting this deal. First, for many countries, China has replaced the U.S. as their top trading partner. Second, U.S. weapons supplies are strained—most are already sent to Ukraine. Third, many U.S. weapons contain re-exported Chinese intermediate goods; why not buy directly from China? Finally, psychologically, if a nation has shed its “slave mentality,” why voluntarily accept such “naked humiliation”?
My Vision
Can I improve on Zoltan’s idea? Clearly, yes.
Our core goals remain: reduce the real value of existing U.S. Treasuries, maintain the dollar as the primary global trade settlement currency, and extend Treasury durations to 100 years. Additionally, I propose a new goal: establish Bitcoin as a globally neutral reserve asset.
Choosing the right benchmark for fiat depreciation is critical. If the benchmark is a consumable commodity like oil or food, inflation could trigger social unrest. Depreciation must target an asset that doesn’t materially harm ordinary citizens’ living standards.
Zoltan’s approach uses time as the benchmark—swapping a 10-year bond for a 100-year bond. Due to time value of money, a 100-year claim has far less intrinsic value than a 10-year one. But this requires counterpart consent. I propose using Bitcoin as the benchmark—and crucially, this can be done unilaterally, achieving the same end result as Zoltan’s method.
My Plan:
Step One: Public Announcement
Bessent delivers a speech announcing the U.S. plans to reconstruct the global reserve currency system. The dollar will remain the pricing currency for global trade, but Bitcoin will replace Treasuries as the reserve asset.
Step Two: Gradual Depreciation
The U.S. Treasury will buy Bitcoin at dollar prices above current market rates. This gradually increases Bitcoin’s market cap until it’s large enough to serve as a global reserve asset. For example, to match the size of the U.S. Treasury market, Bitcoin’s price must reach $1.8 million.
Example:
Assume Bitcoin trades at $100,000. Bessent announces the Treasury will buy at $200,000. Unlike traditional purchases, the Treasury won’t pay cash—instead, it issues a blockchain-based, zero-coupon 100-year Treasury bond (TSY100). Anyone meeting KYC requirements can redeem these bonds at face value, interest-free, via a rolling one-year repo mechanism. In effect, Bitcoin sellers receive dollars—but actually hold century bonds as collateralized loans.
Market Reaction:
Since the Treasury’s bid exceeds spot prices, traders gain arbitrage opportunities. They borrow dollars, buy Bitcoin below the Treasury’s bid, sell to the Treasury for TSY100 bonds, then repo the bonds for dollars to repay loans. With everything on-chain, anyone globally can participate, driving Bitcoin’s price rapidly to the Treasury’s bid level.
Criticism:
Why would Bitcoin holders trade their asset for “unattractive” century bonds? Simple: the price is high enough. Much like many believe handing Bitcoin to BlackRock is wise, sufficiently high prices override idealism and common sense.
Step Three: Extend Debt Duration
Now, the Treasury holds Bitcoin on its balance sheet and owes century bonds. Markets anticipate Bessent will raise bids, prompting early action. The Treasury can then sell Bitcoin at higher prices for dollars. For example, if the market reaches $300,000 and the Treasury bought at $200,000, the $100,000 profit can retire 10-year Treasuries. This gradually extends the weighted average maturity (WAM) of national debt.
Treasury holders suffer no losses, knowing profits will buy non-circulating debt. This is crucial—it maintains TradFi confidence in Treasuries as collateral and pricing mechanisms.
Step Four: Social Media Banking
To further solidify dollar dominance outside China (where Facebook and X are banned), Bessent proposes Zuck (Facebook’s CEO) and Musk (X’s CEO) integrate dollar stablecoin transfers into their apps. Ideally, use Ethena’s synthetic dollar stablecoin USDe. This brings the world—especially the Global South (where Facebook, WhatsApp, and Instagram dominate online interaction and commerce)—into the dollar system, effectively countering de-dollarization efforts.
More importantly, national leaders can hardly stop this. Attempting to restrict social media dependence risks instant social unrest. Just as the U.S. can’t ban Chinese-owned TikTok—because younger voters would oust any politician pushing such a ban in the next election.
As digital dollars accumulate globally, these surpluses may be stored in Bitcoin or other cryptos. If Bitcoin keeps rising, small holders will naturally sell back to the Treasury for century bonds. Thus, Treasury holders shift from a few nations to billions of ordinary people worldwide. Rather than persuading a few countries not to dump debt, having billions of individuals hold it分散 makes mass sell-offs nearly impossible. Ultimately, the Treasury ensures debt holders prefer long-term retention.
Technical Blueprint
Regardless of what World Liberty Financial (WLF) tells investors they’re building, this is what they should actually do. In case you didn’t know, WLF is a crypto organization linked to the Trump family. Its real purpose should be leveraging Web3 technology and WLF infrastructure to directly reform the U.S. Treasury—bypassing the traditional “too big to fail” banks, whose main contribution seems to be triggering repeated financial crises requiring monetary bailouts, thereby eroding America’s economic foundation.
A quick visit to New York City—the financial heart of Pax Americana—reveals the reality. Nightclubs shine bright, but poverty, homelessness, and crime linger everywhere. Blame JP Morgan & Chase and the traditional banking system.
Web3’s tech stack must run on public blockchains. You know the answer: never stop advancing! From this perspective, Aptos is ideal. It’s currently the fastest (800ms), cheapest ($0.00005 per transaction), and most reliable (99.99% uptime) public blockchain for high-performance financial transactions.
Aptos proves its worth. According to RWA.xyz, Aptos quietly ranks among the top three networks with the most institutional assets on-chain, partnering with Franklin Templeton, Brevan Howard, and Microsoft. Its MOVE architecture, designed internally by Facebook for financial transactions on the world’s largest social network, is fully capable.
Maelstrom won’t work for free. Full disclosure: we hold significant Aptos and Ethena assets.
The U.S. Treasury must build an on-chain exchange for digital dollars, century bonds, and Bitcoin.
Step One: Launch Digital Dollars. The Treasury should adopt two digital dollars: Tether’s USDT and Ethena’s USDe. USDT represents dollars held in the U.S. banking system, while USDe is a synthetic dollar generated by going long crypto and short perpetual swaps, with all assets custodied at major crypto exchanges. Politics is “quid pro quo”—how do current officials benefit? Commerce Secretary Howard Lutnick holds equity in Tether, while World Liberty Financial (WLF) holds millions in Ethena governance tokens ($ENA). If Tether and Ethena are selected as Treasury-endorsed digital dollars, their stakeholders profit. This self-interest drives human progress.
Step Two: Tokenize Century Bonds. The Treasury mints a token (TSY100) for each century bond. Users can buy TSY100 on Aptos using wrapped Bitcoin (already possible via Wormhole, Celer, LayerZero). Next, establish a repo mechanism allowing users to pledge TSY100 for USDT or USDe loans.
Technical Note: The Treasury can’t directly create USDT or USDe. For USDT, the Treasury must transfer funds to Tether’s bank account to mint USDT. For USDe, the Treasury first mints USDT, then uses Ethena’s mechanism to generate USDe. This process can be automated via APIs from Tether and Ethena, executed atomically.
Step Three: Build a Web3 Money Market Exchange. The Treasury creates a permissioned Web3 money market exchange—call it EagleSwap. The Treasury already has ID.me, an identity verification service. Expand it to allow global users to whitelist their Aptos wallets via signature. When users connect their Aptos wallets to EagleSwap via desktop or mobile, whitelisted users can freely trade between USDT, USDe, TSY100, and wrapped Bitcoin. Given the Treasury’s massive global trading in Bitcoin, dollars, and Treasuries, EagleSwap quickly becomes the most liquid venue for these assets.
Next Phase: Connect Social Media Platforms. The Treasury can partner with oligarch-controlled global social media platforms. Facebook and X are prime candidates to launch crypto wallet features. By abstractly linking users to EagleSwap, they can easily transfer, trade, and store digital dollars, century bonds, and wrapped Bitcoin. For the Global South, the urgent need is conducting dollar-denominated commerce outside traditional financial systems. Despite dollar flaws, it remains more stable than other fiat currencies. This connecting infrastructure should run on the Aptos blockchain.
Oligarchic control is unquestionable—evident from their prominent roles at Trump’s inauguration. Now, they must act further, weakening the parasitic traditional finance (TradFi) banks.
I’ve previously discussed unilateral dollar depreciation and related technical methods. Next, I’ll explain how appropriate U.S. legislation can give America a unique edge in producing “neutral reserve assets.”
Neutral Reserve Asset: America’s Potential Advantage
To convince Pax Americana elites to accept this plan, the U.S. must possess a distinct advantage in Bitcoin mining. Bitcoin mining consumes vast energy solving complex math problems. So, does the U.S. have abundant, cheap energy? Yes—two clear advantages exist.
First, America’s rich hydrocarbon resources. Vast untapped hydrocarbons lie within our so-called “national borders.” Only capital and drilling permits are needed. Crucially, drilling for Bitcoin mines isn’t limited by energy geography. Often, reserves are far from population centers, and transportation costs exceed extraction costs. But building local power plants to supply Bitcoin mines eliminates transport needs entirely.
Many remote areas, rich in energy but lacking pipelines or transport infrastructure, can now utilize “stranded” resources. Establishing localized power stations and Bitcoin mines unlocks full potential. Alaska, remote and hydrocarbon-rich, with cold climate ideal for cooling, becomes a perfect Bitcoin mining hub—cold weather drastically cuts cooling costs.
Second, America’s capitalist tradition. The U.S. capitalist system is another advantage. Regardless of moral debates, this system exists. The U.S. was founded by tax-evading slaveholders who drafted a constitution ensuring their capital’s perpetual growth and dynastic economic-political control. Such a system is ideal for multi-year, capital-intensive projects like hydrocarbon drilling and Bitcoin mining.
Another emerging advantage: domestic semiconductor manufacturing. TSMC is nearing completion of several advanced fabs in Arizona. With government subsidies and tax breaks, other foundries will be encouraged to build in the U.S. This means Bitcoin ASIC chips can be domestically produced. Even if Bitcoin’s price surge drives global demand, the U.S. won’t face chip shortages.
But a major challenge remains: While traditional fiat capital enjoys top-tier policy treatment in the U.S., Bitcoin and other cryptos lack similar support. Solving this requires constitutional-level protection for crypto. Miners’ core principle is decentralization and censorship resistance, yet lawmakers might demand miners or node operators implement censorship. Therefore, public crypto ledgers (like blockchains) must be recognized as protected speech. This is logical—public blockchains are decentralized networks powered by miners consuming electricity, fundamentally forming an immutable chain of digital speech.
If the U.S. wants to become the global Bitcoin mining hub, a single sub-200-word law suffices: “Cryptocurrencies and blockchain-based tokens shall be considered forms of protected speech. All laws applicable to free speech apply to users or intermediaries of public blockchain technology. Cryptocurrencies and public blockchains belong to the private sphere; no government entity may compel intermediaries, participants, or blockchain node operators to collect or provide data on participants and transactions.”
With a pro-energy government and pro-permissionless-innovation crypto legislation, the U.S. can lay a solid foundation to attract global crypto activity. Energy and ASIC production require massive CAPEX—areas where the U.S. excels, offering legal protection for peer-to-peer decentralized networks. These conditions will concentrate Bitcoin network hash power in the U.S. Ultimately, the “neutral reserve asset” will be produced domestically, granting America immense strategic advantage in the global economy.
Once enacted, repealing such legislation will be extremely difficult. Like how politicians criticize Big Tech and social media but have made almost no progress undoing Section 230 of the 1996 Communications Act, which grants platforms immunity from liability for user content—a status quo too profitable to dismantle. Similarly, a “coalition of interests” could form between crypto and politicians, delivering high-paying jobs and tax revenue to businesses and individuals.
Rise of the Hodlers
If Bessent pushes Bitcoin past $1.8 million, a new class of the wealthiest people in human history will emerge. Currently, some of Bitcoin’s largest holders are U.S. residents or U.S.-registered companies. For example, BlackRock accumulated nearly 600,000 Bitcoins—worth nearly $60 billion—in under a year after launching its Bitcoin ETF. Given that U.S. political power heavily depends on wealth, these Bitcoin holders will wield enormous influence. If Republicans adopt pro-crypto policies, these hodlers may remain loyal supporters for decades.
For politicians, re-election is paramount. Beyond Trump, Republicans sharing his ideology may win again in 2026 or 2028. Enriching America’s crypto holders while reinforcing dollar hegemony is arguably the best re-election strategy for Republican politicians.
Global Acceptance of Bitcoin as Reserve Asset
Will other major trade surplus nations accept Bitcoin replacing Treasuries as reserve assets? Yes.
Assuming Bitcoin’s market cap is large enough to support trillions in global trade, Bitcoin offers key advantages over Treasuries:
-
Bitcoin’s code cannot be unilaterally changed.
-
Bitcoin’s decentralized design ensures no one can alter its code unilaterally. Even if some U.S. miners attempt a hard fork to exclude transactions or modify supply, the new chain’s Bitcoin would instantly drop to zero, wiping out their own wealth. Game theory underlying Bitcoin’s blockchain prevents this.
-
-
Bitcoin transactions are borderless. With internet access, Bitcoin can be accessed and transacted permissionlessly anytime, anywhere.
-
Bitcoin is the purest derivative of monetary energy. It effectively preserves the energy value of trade surpluses over time, making it an ideal reserve asset.
No nation, including China, wants to assume the role of global reserve currency issuer and let its bond market become the world’s reserve asset. Doing so requires open capital accounts, and when a nation shifts from producing real goods to financial engineering, most citizens suffer—contradicting “common prosperity.” Thus, an improved system may involve continuing dollar trade or bilateral local currency exchange, while storing trade surpluses in Bitcoin. This benefits everyone… except “too big to fail” traditional financial institutions (TradFi), which will face declining power and influence as decentralized finance (DeFi) grows.
The Right Wish
Stacking sats is my hobby, and I hope yours too. So if you ever sit at the “genie’s table,” dressed to impress, make sure you ask for the right wish.
Postscript: Naivety and Reality in Crypto
Crypto enthusiasts are often the smartest and most naive people in the world. Trump is giving them a crash course in politics.
Bitcoin surged from $70,000 to $110,000 in under 60 days, driven by widespread belief in the crypto community that all their wishes will be granted under Pax Americana. But there’s a flaw: in any bilateral value exchange, the rational move is to receive the goods before paying. Trump and Republicans already received what they wanted—enough votes to win the presidency and party majorities in Congress. Now it’s their turn to pay, but their timeline differs vastly from our “speculative maniacs” staring anxiously at one-second candlesticks.
Trump is forming working groups and Senate subcommittees but taking no concrete action. When Trump acts, he moves fast—imposing 25% tariffs on the U.S.’s largest trading partner within days of announcement, swiftly eliminating ESG and DEI policies across federal agencies. These examples show Trump isn’t unwilling to act on crypto—he simply doesn’t prioritize crypto regulation or a Bitcoin Strategic Reserve. This is unfortunate, as single-issue crypto voters were pivotal to their electoral victory.
Will Bitcoin Prices Drop?
As the world realizes U.S. politics haven’t fundamentally changed under Trump, crypto prices may retreat to Q4 2024 levels. I maintain my forecast that Bitcoin will retest the $70,000–$75,000 range.
How Can the Crypto Market Recover?
Reviving the market may require: monetary easing by the Fed, U.S. Treasury, China, or Japan, or clear legislation supporting permissionless crypto innovation. But if the bill is a “Frankenstein” cobbled together to benefit Coinbase, BlackRock, and traditional stock investors, it won’t propel the market to new highs or achieve “decentralize everything” for us crypto degens. Such legislation betrays crypto ideals and offends the “spirit of decentralization,” inviting swift and severe backlash.
Act Now: Speak Up for Crypto’s Future
Still, hope remains. If you’re a U.S. Hodler, it’s time to act! Let your elected representatives know you won’t tolerate political stagnation. Email them, write letters, or visit their local offices. Politicians respond to engaged constituents. If you believe a Bitcoin Strategic Reserve is essential, speak up—don’t just like a post on X (formerly Twitter).
The problem is digital devices let us vent anger in echo chambers without driving real-world action. But everything you truly value comes through effort and sacrifice. There’s no “easy button” in crypto politics—open your eyes, act, or the market may keep falling.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Arthur Hayes
