Financial systems are deeply interconnected, and the rise of crypto has exacerbated their vulnerability to geopolitical conflicts and mismanagement. The author references a cultural theorist warning that technology often creates unintended consequences. They also highlight the geopolitical battle for control over crypto, including the potential for the next financial crisis.
The world needs a multilateral response to crypto for shared growth because financial systems are highly connected and interdependent. — Reuters “WHEN you invent the ship, you also invent the shipwreck.
When you invent the plane, you also invent the plane crash; and when you invent electricity, you invent electrocution! ” According to Paul Virilio, a cultural theorist who said the above, technology will solve existing problems and create new ones. He wasn’t just referring to routine accidents or system failure as one would think, but to modern warfare! Tech shapes how we compete or fight against each other, by overcoming the world with temporal and spatial advantages.
Likewise, rulers want to control how money and capital move. Blockchain creates financial rails for cryptocurrency or digital assets to travel instantly around the world. Over time, it has become a huge alternative network that shadows the traditional financial system. Hence, it’s foreseeable that crypto will be the new battleground, if it isn’t already.
The irony is that crypto, which was created to address the 2008 Global Financial Crisis, might unintentionally cause the next one! It explains how crypto is captured across the geopolitical spectrum: left and right, establishment and resistance, government and business. And for a perfectly rational reason: crypto circumvents the financial systems led by the West, which are used coercively to sanction rogue states, freeze their assets, impose trade barriers, and exclude them from Swift .
Long before Iran announced a crypto payment option for its Strait of Hormuz toll, Venezuela was on it since 2024 where 80% of its oil revenue flowed through crypto. North Korea has state-sponsored cyber terrorists stealing crypto to fund nuclear arms, based on US Federal Bureau of Investigation reports. Both sides of the conflict are served: Ukraine raised crypto donations from the world for self-defence and humanitarian needs; Russia legalised crypto in foreign trade as sanctions bite.
In post-coup Myanmar, the exiled government recognised tether as its official currency despite the national crypto ban by the junta-led central bank. On a broader horizon, crypto enables Brics members to dedollarise. Though middle powers with volatile currencies from Argentina to Turkiye are wary of crypto’s substitution effects, some argue that it mollifies their people with an “economic safety net” to reduce unrest.
Even El Salvador, where bitcoin is legal tender, had purportedly used it as a bargaining chip in International Monetary Fund negotiations. Meanwhile, the empire strikes back! The United States has been trying to establish its supremacy as the “crypto capital of the world”. After trailing Europe’s regulatory framework for the better part of the decade, it sprung back with landmark legislation: Genius , Clarity and Pace .
Stablecoins have become an extension of US foreign policy to reinforce the dollar in global trade. And by creating a Strategic Bitcoin Reserve, the United States has legitimised the asset as ‘digital gold’ to be stockpiled. No other major economy has designated bitcoin for such critical national interest. The United States is bringing its brand of exceptionalism to crypto, ie, it doesn’t have to play by the rules, it sets them, like how it left Bretton Woods.
For some in Europe, this is nervously perceived as “neo-mercantilism” and a threat to their monetary autonomy. Countries that welcome dollar stablecoins risk a “Trojan Horse of financial imperialism”, warned one think tank. Is this the remaking of global finance? The world needs a multilateral response to crypto for shared growth because financial systems are highly connected and interdependent.
The trade-off is no longer between innovation and regulation, but between politicians and regulators. Crypto is becoming too big to fail. The last time they were stress-tested: Terra Luna crippled the sector, Silicon Valley Bank collapsed, FTX burnt sovereign funds. They’re no longer debanked but have bank charters !
They’re well-lobbied on both sides of Capitol Hill; even the first family is involved! Conventionally, the failure of one market or institution can rapidly transmit beyond borders, threatening financial stability. This is why regulations are tightly standardised with resilience focus and strong coordination among market centres. In crypto, however, there isn’t much international harmonisation yet despite persistent efforts.
Rules are unevenly implemented amid a prolonged sunrise period. Any destruction could be amplified globally at lightning speed, with systemic contagion, and necessitate zero-hour response that current systems are ill-prepared for. Alas, this new financial order won’t be unified as long as macro-crypto remains fractured by protectionism and hardened along ideological lines. If Satoshi Nakomoto is found today, he can complete this sentence: “When you invent crypto, you also invent...
” Edmund Yong is a director of the Generative AI Association of Malaysia and ambassador of the Global Blockchain Business Council founded in Davos. The views expressed here are the writer’s own.
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