“The rules are written by those who benefit from them” – Edward Snowden
Bitcoin, by design, is a tool for financial and political freedom. But what happens when global powers start deciding who can and cannot use it and to what extent, including as legal tender for a sovereign nation?
Recent events suggest that bitcoin is no longer just an independent asset; it is rapidly becoming a geopolitical chess piece. Two key developments highlight this shift:
- El Salvador’s IMF loan deal imposing a bitcoin rollback. The country, which made history in 2021 by adopting bitcoin as legal tender, has now been pressured by the International Monetary Fund (IMF) to strip bitcoin of its legal status as a condition for financial aid.
The agreement prohibits tax payments in bitcoin, bans additional government bitcoin purchases, and forces the government to step back from its involvement in the bitcoin economy, including unwinding its participation in the Chivo wallet. - The U.S. stockpiling bitcoin as part of a strategic reserve. A recent executive order establishes a Strategic Bitcoin Reserve, preventing the sale of government-held bitcoin and directing agencies to accumulate more through ‘budget-neutral strategies’.
This shift in U.S. policy underscores a strategic embrace of bitcoin’s value while actively discouraging smaller nations from leveraging it for financial sovereignty. The contradiction is evident.
While the U.S., as the IMF’s largest shareholder with 16.5% voting power, positions bitcoin as a geopolitical asset under its influence, it ensures global dependence on the dollar, reinforcing its monetary hegemony.
This mirrors the Gold Standard era when nations entrusted their gold reserves to the U.S. under the Bretton Woods system, only for the U.S. to unilaterally close the gold window in 1971, severing gold convertibility and effectively confiscating foreign reserves. History may not repeat itself, but it certainly rhymes. Is bitcoin next?
IMF Loans or Leverage? Enforcing Dollar Hegemony
“The issue today is the same as it has been throughout history, whether man shall be allowed to govern himself or be ruled by a small elite” – Thomas Jefferson
For decades, the IMF has acted as a key enforcer of global monetary policy, using financial aid as a tool to sustain the U.S. dollar’s dominance. Countries in need of assistance often find themselves compelled to adopt policies that serve IMF and Western economic interests.
Since the 1980s, the IMF has structured its assistance around quantitative targets and structural conditions, aiming to achieve short-term stabilization and long-term policy reform.
However, these imposed measures frequently clash with the domestic priorities of borrowing nations, leading to political resistance, partial compliance, or even policy reversals once IMF oversight ends.
El Salvador’s recent experience highlights this dynamic. After facing IMF opposition to its bitcoin adoption, the country has now agreed to strip bitcoin of its legal tender status in exchange for financial aid.
This underscores a broader reality, which is, I dare say, when monetary sovereignty threatens dollar hegemony, the IMF ensures compliance—like a shepherd guiding its flock, whether to safety or the inflationary slaughterhouse.
Some governments, nevertheless, are often reluctant to accept these conditions due to their political costs. Pakistani Prime Minister Imran Khan’s administration, for instance, openly opposed an IMF bailout in 2015, fearing it would inflict economic hardship on the people.
El Salvador’s case follows this familiar pattern. Since adopting bitcoin as legal tender in 2021, President Nayib Bukele has repeatedly resisted IMF demands to abandon the policy, even turning down a $1.3 billion loan when the Fund required bitcoin’s removal as a condition.
Rather than depend on the IMF’s assistance, Bukele pursued alternative funding mechanisms such as the bitcoin-backed “Volcano Bonds” to finance national projects.
In 2023, El Salvador successfully repaid an $800 million bond without IMF’s support, defying widespread predictions of economic collapse. These actions reflected Bukele’s commitment to reducing reliance on external financial institutions.
This raises a fundamental question. If bitcoin were truly a failed experiment, as some adamant critics claim, why would the IMF insist on its removal?
The U.S. Bitcoin Reserve: A Contradiction or a Strategy?
While the IMF is pushing nations away from bitcoin, the U.S. is taking a different approach. The recent executive order to establish a ‘Strategic Bitcoin Reserve’ suggests that American policymakers see value in accumulating bitcoin, just not as legal tender for smaller economies.
This contradiction is striking: why is bitcoin acceptable for U.S. reserves but dangerous for El Salvador’s monetary system? The logical conclusion is that the U.S. is positioning itself to dominate bitcoin’s future role in global finance while ensuring other nations remain dependent on the dollar.
This intervention is not without historical precedent. During the ‘Dollar Diplomacy’ era, the U.S. government, alongside the American financial industry, demanded Central Bank Independence (CBI) from several Latin American countries to secure loan repayments. The IMF continues this trend today by mandating borrowing countries to enhance central bank independence as part of loan agreements.
To be clear, Central Bank Independence (CBI) refers to the IMF’s practice of requiring borrowing countries to remove political influence over their central banks as a condition for financial assistance. The goal is to ensure that governments cannot manipulate monetary policy for short-term political gain, such as printing money to cover budget deficits or resisting structural reforms.
However, in practice, CBI conditionality gives the IMF and global financial institutions greater leverage over a country’s economic policy. By limiting a government’s control over its monetary system, the IMF ensures compliance with its austerity measures and broader financial policies, often aligning with Western economic interests.
In the case of El Salvador, the IMF’s demand to remove bitcoin as legal tender can be seen as an extension of this strategy, restricting a sovereign nation’s monetary autonomy under the guise of financial stability, while powerful institutions like the U.S. accumulate bitcoin as a strategic asset.
Connecting the Dots: The Bigger Geopolitical Picture
Bitcoin’s original vision was one of financial sovereignty, removing control from central banks and Governments and redistributing it to individuals. But as it gains more prominence, powerful institutions are moving to either control it or suppress its adoption by others.
The IMF’s actions indicate a clear preference for bitcoin as a reserve asset under controlled circumstances rather than a tool for financial independence. If bitcoin were truly irrelevant, there would be no need to pressure El Salvador into rolling back its adoption. Instead, this move suggests that sovereign bitcoin adoption represents a fundamental challenge to global financial control.
With the U.S. now actively stockpiling bitcoin, we must ask: Is bitcoin shifting from a decentralized financial tool to a state-leveraged strategic asset? Has there ever truly been a distinction between money and the state, or does this move further reinforce their deep entanglement?
If bitcoin was designed to separate money from government control, is it now being absorbed into the very system it set out to challenge?
As Saifedean Ammous aptly stated, ‘The separation of money and state is as important as the separation of church and state.‘ If this holds true, what does it mean for bitcoin’s future when nation-states, despite their inability to control the network itself, find new ways to shape its adoption, regulation, and financial influence?
“Who can ban bitcoin? Nobody!” – Vladmir Putin
For centuries, those who control money have controlled the world. Bitcoin emerged as a challenge to this system, a decentralized alternative beyond state control. History is clear, any threat to monetary hegemony faces resistance.
While the U.S., as the IMF’s largest shareholder with 16.5% voting power, positions bitcoin as a strategic asset, it ensures smaller nations remain dollar-dependent. This mirrors Bretton Woods, where nations entrusted their gold to the U.S., only to have it seized when the gold window closed in 1971.
Bitcoin’s real power lies in its protocol, individual sovereignty, and grassroots adoption. It cannot be seized, devalued, or manipulated like fiat. Its strength comes from individuals running nodes, securing the network, and transacting outside government control.
The real question is whether bitcoin will remain in the hands of the people or be absorbed into the very system it was meant to disrupt. And if that were the case, then how?
We must push back by strengthening grassroots bitcoin education, supporting bitcoin-focused initiatives with critical resources, and ensuring that every entity working to enhance the protocol and network thrives.
The expansion of more nodes and miners, decentralization of mining operations, and increased adoption at the individual level are essential. The fight for bitcoin’s future is not just about resisting state influence. It is about reinforcing the very foundations that make bitcoin unstoppable.
