Donald Trump assumes office with plans to make the United States the world’s bitcoin mining capital. Many are celebrating the idea of bitcoin as a Strategic Reserve Asset. Supporters like Michael Saylor, Tether, and other large institutional players argue this is a landmark achievement, reinforcing bitcoin’s status as a legitimate store of value. However, this growing institutionalization risks compromising bitcoin’s original ethos as “freedom money,” with its decentralization and censorship resistance eroding under the weight of regulatory and economic control.
The Trump administration has made bitcoin mining a national priority, presenting it as an opportunity to dominate the “block space. ” Rachel Silverstein, general counsel for Bitfarms in the United States, said on Election Day that “sanctions are, in my opinion, a way to avoid war” and went on to argue that it is vital to let sanctions be a tool that states they can use.
Bitcoin blocks have a finite capacity, limiting the number of transactions that can be included in each block. Fred Thiel, CEO of Marathon Digital, commented in an X post: “Block space ensures the ability to transact. Let’s keep the US as the most dominant Bitcoin mining country in the world.” This dominance could empower the U.S. to enforce transaction censorship via compliance with Office of Foreign Assets Control sanctions or other regulatory tools.
The precedent for this already exists. In 2021, Marathon attempted to mine “OFAC-compliant” blocks, filtering out transactions from sanctioned entities. More recently, mining pools like F2Pool have been reported to potentially exclude sanctioned transactions. Trump’s push for mining dominance presents a clear path toward institutionalizing those practices, leveraging tools like the Bank Secrecy Act and FATF recommendations that promote widespread KYC and classify wallet software as mining service providers. cryptoassets.
American regulations set the tone for the foreign community, specifically in monetary systems. For example, the FATF’s global anti-money laundering criteria reflect the priorities of the United States, and its recommendations have influenced crypto regulations around the world. The Trump administration can simply use the dominance of bitcoin mining to propagate a framework that aligns with US geopolitical objectives. Former White House cybersecurity adviser Carol House warned in a 2023 statement that network-level censorship could simply serve national interests, demonstrating the possibility of regulating bitcoin under the guise of national security.
The United States has a history of extending its monetary jurisdiction beyond its borders to combat illicit activities. For example, in January 2023, the US Treasury Department’s Financial Crimes Network rated Bitzlato Limited, a cryptocurrency exchange registered in Hong Kong, as a “major cash laundering concern” due to its ties. with illicit Russian finances. This designation led to the prohibition of certain fund transmissions involving Bitzlato through any covered financial institution, thus restricting its operations globally.
In March 2023, the U. S. and German governments shut down ChipMixer, a cryptocurrency service that allegedly laundered more than $3 billion in crypto assets since 2017. ChipMixer was allegedly used through ransomware groups, suspected North Korean hackers, and darknet market users to conceal the origins of illicit activities. funds. These moves demonstrate how the United States is expanding its regulatory power to enforce monetary legislation internationally.
Proponents, like Sen. Cynthia Lummis, are touting the SBR as a solution to America’s economic challenges, saying it could simply “address a significant portion of our debt” and our global positioning. Michael Saylor, CEO of MicroStrategy, the proposals go further, suggesting that The US government deserves to earn between 20% and 25% of Bitcoin to “control the global reserve capital network. “
The Saylors Digital Asset Framework highlights the role of criminals’ responsibility in ensuring compliance and transparency, ensuring that participants meet legal and moral criteria while minimizing fraud and malpractice. Frameworks like this can be leveraged for greater centralization, potentially strengthening U. S. control. Bitcoin and transform it from an open and unbiased network to a governance tool.
This narrative hides the threats of Bitcoin’s institutionalization. Saylor mentioned threats related to non-compliance with regulatory standards, stating, “I believe that when Bitcoin is owned by an organization of crypto-anarchists that they are not regulated entities, that they do not recognize the government, or they do not recognize taxes. or fails to recognize reporting requirements, increases the threat of seizure. This outlook aligns with measures such as Lummis’ 2023 amendment to the National Defense Authorization Act, targeting unnamed transactions and asset combinations, and shows how the SRA framework can simply impose strict oversight, reducing Bitcoin’s utility as a censorship-resistant currency.
While Bitcoin’s role as an SBR is gaining attention, stablecoin giant Tether is trading in parallel, benefiting greatly from global instability. The reports imply that Tether’s earnings in the third quarter of 2024 exceeded BlackRock’s, with Tether reporting a net revenue source of $2. 5 billion, compared to BlackRock’s net revenue source of $1. 63 billion for the same quarter.
Tether’s substantial earnings were primarily due to its investments in U.S. Treasury securities, which yielded significant returns during the quarter. By backing its reserves with U.S. Treasuries, Tether inadvertently supports U.S. monetary policy while providing a stopgap for regions burdened by imported inflation. This maintains the U.S. hegemony at the cost of worsening global financial inequalities, turning Tether into a lifeline, a control mechanism and a top buyer for US debt.
Bitcoin is hailed as “loose money,” a tool of monetary sovereignty, free from state control. However, as institutional actors co-opt their narrative, their basic homes are threatened. Bitcoin’s Strategic Reserve, hailed for accelerating Bitcoin adoption through global game theory and increased legitimacy, also opens the door to excessive regulation that threatens to undermine the network’s decentralization.
On a technical level, the realities of over-regulation can also manifest themselves in the mechanics of Bitcoin mining. Miners facing regulatory compliance would arguably increasingly prioritize transactions that they comply with, leaving less block area for non-compliant transactions. Over time, this can also lead to fees for non-compliant transactions, excluding them from the market. This creates a formula in which monetary sovereignty remains theoretically intact but becomes virtually inaccessible to those who are unwilling or unable to comply with regulatory requirements.
Figures like Donald Trump deserve the systems they claim to strengthen. A few days before his inauguration, President-elect Trump presented a coin called $TRUMP. Announced on its Truth Social and X accounts, the coin jumped more than 300% in a matter of hours, achieving a market capitalization of $8 billion.
Critics claim that such corporations prioritize publicity and profits over meaningful contributions. By focusing on short-term monetary gains, such efforts threaten to trivialize them and divert attention from their role in selling monetary freedoms and resisting institutional control.
According to an Associated Press article, the Trump Organization, through CIC Digital, controls 80% of the tokens and plans up to $1 billion in 3 years.
The foreign network will have to read about the implications of Bitcoin institutionalization. Even if the SRA narrative dazzles with its promises of economic stability, it risks undermining Bitcoin’s core mission. Systemic reforms are mandatory to maintain its role as a tool of human freedom.
This may require repealing or reforming laws such as the International Emergency Economic Powers Act, which grants the President authority to regulate commerce during national emergencies, and the Bank Secrecy Act, which enforces stringent anti-money laundering and financial surveillance measures.
Senator Mike Lee introduced the Privacy Savings Act in September 2024, which aims to reduce the reporting requirements of the Bank Secrecy Act and strengthen coverage of Americans’ financial information, demonstrating that Congress is pursuing privacy-focused reforms.
Having a legislative framework is one thing: it provides clarity, sets expectations and establishes a legal environment in which other people and companies can innovate. However, the framework will not be so restrictive as to undermine the core principles of Bitcoin.
As Fred Thiel’s comments remind us, “it’s all about block space. ” If the United States controls this resource, the ideals of monetary sovereignty and permissionless innovation could be irreversibly compromised. The world faces a choice: keep Bitcoin as a decentralized network for everyone or leave it as a tool of state control.
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