Five Questions That Will Shape Crypto's Place in Geopolitics

A few years ago, the idea that cryptocurrencies would feature in the foreign policy of major powers would have seemed far-fetched. Today they appear in sanctions enforcement, reserve management debates, trade negotiations and the competition between monetary systems. The novelty has worn off, and with it the hype. What remains is a set of structural questions that will determine how far digital assets reshape global finance. Five stand out.

1. Who writes the rules for stablecoins?

Stablecoins have become the main bridge between crypto and traditional finance. The United States set out its federal framework with the GENIUS Act in July 2025, and the European Union's MiCA regulation has governed issuers in Europe since 2024. Hong Kong, Singapore, the UAE, the UK and others have adopted or are finalizing their own regimes.

The key geopolitical question is interoperability. If rules diverge sharply, stablecoin markets could fragment along regional lines, with dollar tokens dominant in some places and restricted in others. If standards converge, perhaps through the work of the Financial Stability Board and standard-setting bodies, a global market for regulated digital dollars could deepen the dollar's reach. Watch how regulators treat foreign-issued tokens: that is where competition between currency blocs will become visible.

2. Will central bank digital currencies matter outside China?

Most major central banks have explored digital currencies, but only a few have launched them at scale. China's e-CNY has the largest pilot program, while the European Central Bank has continued preparing a digital euro, which requires legislation from EU lawmakers before it can be issued. The United States has moved in the opposite direction, with the administration rejecting a retail digital dollar and relying on private stablecoins instead.

This split is itself geopolitical. It sets a public, state-issued model against a private, regulated one. Which model proves more attractive to other countries, and to users, will shape the architecture of digital money for decades.

Cross-border projects are the place to watch. Central banks have experimented with connecting domestic systems for wholesale settlement, most prominently in the mBridge project involving China, Hong Kong, Thailand, the UAE and later Saudi Arabia. The Bank for International Settlements stepped back from that project in 2024, and the platform's future now depends on its participating central banks. If such networks gain real volume, they would offer an alternative channel for trade settlement that bypasses correspondent banks in dollar-based systems. So far, volumes have been modest.

3. How will sanctions and crypto evolve together?

Crypto's relationship with sanctions is double-edged. It offers sanctioned actors ways to move value outside banks, and Russia, Iran and North Korea have all been linked to crypto-based schemes, from trade settlement to large-scale hacks. At the same time, public blockchains leave permanent records, and stablecoin issuers can freeze tokens, giving authorities tools they lack in cash markets.

The trend over the past few years has been toward more enforcement capacity, not less. Exchanges, mixers and even specific wallet addresses have been sanctioned, and major issuers have cooperated in freezing funds. The open question is whether sanctioned states can build parallel infrastructure, such as local-currency tokens or payment networks, that meaningfully escapes this oversight.

Crypto was supposed to make borders irrelevant for money. Instead it has become another place where borders are drawn.

4. Will more states hold digital assets?

The US Strategic Bitcoin Reserve, established by executive order in 2025 with forfeited coins, made sovereign holdings of bitcoin a mainstream topic. Some US states have passed laws allowing public funds to hold digital assets, and a handful of smaller countries have their own holdings. Most large central banks remain firmly opposed, citing volatility and liquidity concerns.

A useful indicator will be whether any major central bank moves from studying bitcoin to holding it. Until that happens, sovereign crypto reserves remain a political signal more than a monetary pillar. Gold, which central banks have been buying at an unusually strong pace since 2022, still plays the role of neutral reserve asset far more convincingly.

5. Can crypto markets survive their own politics?

Crypto's political success has created new risks. Its growing entanglement with party politics in the United States means that policy could shift with elections. Conflicts of interest involving officials and politically connected ventures have drawn criticism from lawmakers and ethics watchdogs. And the market's integration with mainstream finance, through exchange-traded funds and bank partnerships, means that a crypto crisis could now spread more widely than in the past.

There is also a question of partisanship. When a policy area becomes identified with one party, it becomes vulnerable to reversal when power changes hands. Crypto's industry groups have tried to build bipartisan support, and the stablecoin law passed with votes from both parties. But the broader market structure agenda, and the ethics debates around it, remain contested, and the midterm elections in November will test how durable the current consensus is.

The volatility of recent years is a reminder. Prices have repeatedly swung by tens of percent within months, and episodes of forced liquidations can erase billions of dollars of leveraged positions in a day. Durable political support depends on the sector avoiding a collapse on the scale of 2022.

A framework, not a forecast

These five questions do not predict outcomes, but they help separate noise from signal. Headlines about price moves, celebrity endorsements or speculative tokens say little about crypto's long-term role in geopolitics. Rule-making on stablecoins, the design of digital currencies, sanctions enforcement and reserve decisions say a great deal. For readers following the field, those are the areas where the next few years will be decided. As ever, this is analysis and not investment advice.