The Genie

Arthur Hayes

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(Any views expressed here are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.)

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Headquartered at Mar-a-Lago, the Pax Americana Make-A-Wish Corporation receives many supplicants. The crypto folks are lining up just like everyone else to shoot their shot at getting one or many wishes granted. The mercurial genie, The Orange Man, flanked by a phalanx of sycophants, holds court in the southern Florida swamp lands while blasting 1980s bangers at his country-cum night club on a weekly basis.

A genie is neither good nor bad; it is the grantee’s wish that we should judge. Every culture has moralistic stories about how misguided wishes aimed at achieving shortcuts to success, wealth, or personal happiness create unintended consequences. The moral of the story is that there is no easy button in life; all good things are the product of hard work and effort.

The key wishes of many in the crypto industry worldwide I aim to discuss pertaining to the establishment of a Bitcoin Strategic Reserve (BSR) and Pax Americana crypto regulation. Broadly speaking, many misguided crypto folks wish for the US government to print dollars and purchase Bitcoin as part of a national stockpile and to enact regulatory moats around crypto businesses in which they have a financial interest. I believe these folks are asking for the wrong things. Let’s do the hard thing and ask the genie for something that cannot be easily undone by the next administration, regardless of its political party affiliation.

In the first part of this essay, I will argue why a BSR and a Frankenstein crypto regulatory bill are net negatives for the industry, both locally and globally. Next, I will offer a suggestion for those who line up day after day dressed in a seersucker suit or block heels and a summer dress hoping to ask the orange genie for a wish, what they should ask the orange genie to grant.

Bitcoin Strategic Reserve

What can be bought can be sold. The fundamental problem when a government stockpiles any asset is that they buy and sell the asset primarily for political, and not financial, gains. Does Bitcoin in and of itself do anything for the US government when considering the current structure of the global economic system? No. Bitcoin is just another financial asset. While readers may believe it is the hardest money ever known, created by the one true god Satoshi, I can guarantee you that the genie isn’t motivated by a spiritual need to please the Lord. He is motivated by placating a voter base that helped bring him into office.

Let’s assume that Trump is able to create a BSR. The government buys one million Bitcoin, as suggested by US Senator Lummis. Boom! The price goes nuts. Then, the buying concludes, and the up-only trend channel stops.

Fast-forward two to four years. By 2026, the Democrats could ride to victory on voter dissatisfaction that Trump failed to quell inflation, stop any of the forever wars, fix the food supply, drain the swamp, etc. What if they got a veto-proof majority in the House of Representatives? By 2028, what if a Democrat won the election … Gavin Newsom could rise like a phoenix, and little boys would be allowed to chop off their dicks again without parental consent. Huzzah!

To an incoming Democrat-controlled legislature or Presidency, finding easy piles of cash to spend on goodies for their supporters is the first directive. It is the first directive of any politician, regardless of the political system in practice. There are one million Bitcoin just sitting there, ready to be sold; it just takes a signature on a piece of paper. The market would rightly fear when and how these Bitcoin would be sold. Would it be done to minimize market impact and maximize dollars received, or would it be done maliciously to punish the crypto holders who supported the Orange Man? We don’t know, but the uncertainty would cap enthusiasm for Bitcoin and the crypto capital markets as a whole.

Creating a BSR or a national stockpile of shitcoins, including the likes of Ripple, turns any cryptos held by the government into a potent political weapon. Furthermore, as a purely political ploy, is the US government going to engage meaningfully in the community? Are they going to donate to sponsor Bitcoin core devs? Are they going to run nodes? Maybe … but the way the BSR is talked about, it appears to me to be a set-it-and-forget-it type of exercise. Trump and the Republican party can look at a mooning price of Bitcoin, claim mission accomplished, and hustle David Bailey for more campaign donations at $10,000 per plate galas. Don’t hate the playa, hate the game. Asking the genie to grant this wish will lead to unnecessary pain in under two years.

The Frankenstein Crypto Bill

The easiest way to understand what crypto regulations a hodler deems acceptable is to gaze into their portfolio. From my vantage point — far away from the circus surrounding the genie — it seems that folks who own large stakes in centralized crypto financial intermediaries are most likely to have their crypto regulatory wishes granted due to the amount of noise they generate. Unfortunately, those building truly decentralized tech and applications do not have the financial resources to play politics at this juncture of the cycle. The wealthiest crypto bros all own exchanges, brokerage services, or some sort of lending platform.

And so, the crypto regulatory wishes likely to be granted, if any are granted at all, will be in the form of overly complicated, prescriptive rules that only large and wealthy centralized companies can afford. That is because the only people who will be able to interpret the laws will be career corporate lawyers who dash in and out of the various alphabet letter regulatory agencies. In case you were wondering, these lawyers don’t fuck for free; these baddies charge upwards of $2,000 an hour. Maybe that’s a bargain in Dubai, but from where I’m from, that’s some expensive hoochie.

Is that what the broader crypto community actually desired from the genie? Was this all an exercise to make Brian Armstrong and Larry Fink wealthier? I’m not a hater; they are doing their jobs … maximizing shareholder value by creating a monopolistic structure that uniquely benefits their business. Maybe those readers who are shareholders of Coinbase and Blackrock want a Frankenstein crypto bill. But I believe this type of regulation does nothing to alter the status quo, and while it’s not directly negative to crypto, it ain’t positive either.

To all you builders globally who are relocating to America because of a perceived crypto-friendly administration, take heed. If you tacitly support such an outcome, your startup is destined to fail. Monopolistic businesses cosseted by an impenetrable wall of gobbledygook regulations don’t look kindly on actual innovation. They use their unique and privileged access to the system to chase away would-be usurpers. You, the startup founder, might have flown to JFK in business class, but you definitely will leave in economy.

Make A Wish

What would I wish for? I’m going to tell you. True to my style, to understand my desires, I need to traverse a bit of financial history and offer my interpretation of certain events.

The big question is, why would the genie grant my wish or a close variant of it? The genie and his lieutenants who do the actual governing of the empire will only grant my wish to help them accomplish their goals.

The overarching goal of two of Trump’s most essential lieutenants, US Treasury Secretary Scott Bessent and US Secretary of State Mark Rubio, is to reform the global economic order to preserve the dollar and American hegemony. As I briefly mentioned in my last essay, “The Ugly”, the dollar system comes in two parts. There is the currency and the reserve asset. Since the Bretton Woods agreement in 1944, the dollar has been the reserve currency, but the reserve asset has changed over time.

Dollar-system Reserve Assets over Time:

1944–1971: Gold

During this period, the dollar’s value was fixed at $35/oz of gold. Certain sovereign nations who were allies of Pax Americana were allowed to redeem dollars for gold at the aforementioned price.

1971–1994: Oil

US President Richard Nixon, to afford the continuation of the Vietnam War and the increased social welfare programs enacted by his predecessor, US President Lyndon B. Johnson, went off the gold standard. The reserve asset became petrodollars. Saudi Arabia was the first country to explicitly agree to price oil in dollars and, with its dollar surplus, invest in US treasuries. Now, the Treasury could issue bonds essentially backed by oil flows from the largest marginal hydrocarbon producer.

1994–2025: FX Reserves of Global Exporters

The US was able to ramp up oil production and improve the economy’s energy efficiency throughout the 1980s. The rise of exporters such as China and other Asian tigers such as South Korea, Taiwan, Japan, Malaysia, Thailand, etc., meant that goods could be produced cheaply for consumption by Americans and Western Europeans. In 1994, China conducted a massive yuan devaluation and formally entered the mercantilist race to stockpile as much foreign hard currency through exports as possible. These exporters were allowed to sell into the large Western consumer market as long as they priced their goods in dollars and, with their dollar surpluses, bought US treasuries.

2025 — ?: Bitcoin/Gold

China was not content being a yellow bitch of Pax Americana. Remember that China regards the 20th century as one of humiliation. Weak emperors signed unequal treaties with Western powers. Subsequently, the two world wars and a civil war destroyed the country. Throughout most of pre-European Renaissance antiquity, China was the largest economy globally; it became a stated goal of the Chinese Communist Party (CCP) to reclaim the glory for the Chinese people. MAGA ain’t just an American thing; the Chinese have been at it since 1949.

To accomplish this goal, China transformed itself from a low-cost, low-quality producer to a low-cost, high-quality producer. As it became very clear that buying more and more treasuries with surpluses further cemented the role of China as a junior power to America, the Chinese leadership stopped accumulating treasuries. Under the old unspoken agreement, a dollar of export surplus must buy a dollar of treasuries. Over the last twelve months of public data, China earned $1 trillion in export surplus but allowed its treasuries stockpile to FALL by $14 billion.[1]

Other export nations have taken note. The majority of the fast-growing global south trades more with China than with America, even though most of this trade is invoiced in dollars. De-dollarization is not about ditching the dollar per se but about investing surpluses in assets not approved by the elites in Pax Americana.

This brings me to the dilemma Trump’s lieutenants face. They need to create a new system that retains dollars as the invoicing currency for trade and invests in a reserve asset that allows them to maintain a well-functioning US treasury bond market. If they are really badasses, they will engineer a solution that quickly reduces the US publicly held debt-to-GDP to around 30%, which is where it stood in the year 2000.

The world will no longer accept saving in treasuries. That is why a neutral reserve asset must be selected. No country is trying to suggest their domestically created fiat currency replace the dollar. That is because the decay of Pax Americana is on display, and it is directly related to the imbalances that must accrue due to the empire’s role as the reserve currency issuer.

That’s it for the financial history, but before I lay out my wish, I want to talk about how one of the most influential TradFi money markets strategists believes the problem I described above can be solved.

DeepSeek

Zoltan Pozsar is a former Dallas US Federal Reserve (Fed) staffer, Credit Suisse strategist, and currently writes a blog that is read by the financial elite in Pax Americana (maybe if I stay on my knees, he will give me a discount on the subscription 🙂). His solutions, which I will describe shortly, might be implemented. Therefore, it’s worth discussing them and, subsequently, how I depart from his thinking. Ultimately, I think his solutions were meant for the 1980s, not 2025. Too many strategists who believe in American exceptionalism think reclaiming the power and prestige of Pax Americana is like the story arc of the movie Top Gun. A sexy Tom Cruise is going to fly an F-14 and quickly dispatch his Russian and now Chinese adversary. Wrong.com.

The recent Top Gun remake featuring an old but still-fit Tom Cruise is an apt metaphor for the current state of world relations with some slight tweaks. Replace an F-18 which costs close to $75 million, with an Iranian Shahed $50,000 drone that is sold across the global south. Tom Cruise, in his 60s, is still flying those overly expensive planes against a swarm of AI-connected drones at a fraction of the price. Both Russia and the US saw how ineffectual 20th-century weapons were on a modern drone-controlled Ukrainian battlefield.

This brings me to DeepSeek. If you live purely inside TikTok and don’t know, DeepSeek is a revolutionary AI large language model (LLM) that performs as well as ChatGPT or Claude but costs 95% less to train. It is open source, and to date, none of the major tech titan CEOs, such as Jensen Huang (NVIDIA) or Satya Nadella (Microsoft), have said the results and cost aren’t legit.

DeepSeek is important because it was produced by a Chinese hedge fund bro out of Hangzhou. China is under a US-imposed economic blockade when it comes to high-performance semiconductors. Under US thinking, Chinese entrepreneurs should not be able to train and deploy an LLM that performs anywhere close to those trained using high-performance US-designed chips. The apparent success of DeepSeek shatters the illusion that whoever spends the most creates the best-performing LLM. It also is further evidence that necessity is the mother of all invention. Economic sanctions couldn’t stop a small 200-person team of determined Chinese entrepreneurs. And if a ground offensive is off the cards to destroy China’s productive capacity, the era of American exceptionalism might be finished. Nothing is wrong with being ordinary unless your whole identity is wrapped up in the made-up concept of nationality and you harbor the illusion of superiority just because you exited a birth canal inside of “America”.

When non-American elites believe they are intrinsically inferior, they do what they are told. This helps American financial elites dictate policies like what currency a country uses in trade and how their national surplus is invested. If non-Americans believe they are equals, they might not just bend over and take diktats from American diplomats. This matters for Zoltan’s policy suggestions because they are bilateral measures. Bessent says “do this,” and a country’s ministry of finance or treasury acquiesces. If the country refuses, then nothing happens. This is the Achilles heel of Zoltan’s policy measures.

Zoltan has the same goal as me: devalue the stock of US treasuries. Additionally, Zoltan correctly argues that the US must lengthen the maturity of its debt stock and reduce the amount of interest paid. Let’s assume Bessent wants to reduce the debt-to-GDP from 100% to 30%. If GDP stays constant, then the real value of debt needs to decline by 70%. The overarching theme of Zoltan’s various ideas is to ask foreign holders of treasuries to swap a shorter-maturity bond for a century bond. The century bond is not tradable, but if the country needs cash, it can be repo’d at par. [2]

Let me explain the mechanics:

Assume you, a bitch-boy global south nation, hold a 10-yr treasury worth $100 and par or face value is also $100.

1. At Bessent’s request, you swap the 10-yr treasury for a zero-coupon 100-yr treasury (century bond). The century bond is worth $30, and par or face value is $100. I’m being cute with bond maths to make the example easy to understand. A bond with no coupon income throughout its life and a longer maturity is intrinsically worth less than a bond with a coupon and a shorter maturity.
2. Your debt’s real value has been devalued by 70%, but its par value or face value remains $100.
3. If you are a good ally (Europe … a bit questionable) or vassal (Philippines … I think Europe belongs here), you can call up the Fed and swap the century bond for par in dollars at no cost. Imagine you need to buy some oil from Saudi Arabia in dollars, the century bond is really worth $30, but the Fed will give you $100 today with no interest.
4. Any dollar surpluses can only be invested in century bonds in future trade. You are not allowed to buy anything else.

This is both a good and bad deal. It’s bad because you suffer a 70% devaluation in real terms. You just agreed to fuck the savings of your country. To add insult to injury, you also agreed that the only place to obtain liquid cash for this debt is with the issuer itself, not in a global market. But on the flip side, you can get an interest-free loan at par from the Fed if you behave.

The carrot is that if you agree to get ass fucked sans protection, you gain access to the Pax Americana co-prosperity sphere. The stick is, if you don’t do this, then your exports will be tariffed into oblivion, and you won’t get access to American weapons to fight your internal and external wars.

There are a few things to point out, which, on balance, point to this deal not being accepted by many. For many countries, China is now their largest trading partner, not the US. American weapons are not available for sale because they used them all to arm Ukraine. Furthermore, American weapons are just re-exported Chinese intermediate goods, so why not just go to the source? And finally, on a mental note, if a nation stops sporting a slave mentality, why get voluntarily fucked in the ass sans protection?

My Wish

Can I improve upon Zoltan’s idea? Obviously, yes.

The goal remains the same: devaluing the existing stock of treasuries, retaining the USD as the currency of choice for trading, and terming out treasury debt to 100 years. The additional new goal is to make Bitcoin the global neutral reserve currency.

The choice of what to devalue a fiat currency against is very important. If you devalue against anything that has real use, like oil or food, you risk societal collapse due to inflation. The devaluation must be against something else that doesn’t impoverish the majority of the plebes in real terms.

Zoltan chose to devalue against time. You exchange a 10-yr for a 100-yr duration asset. The time value of money dictates that something to be received in 100 years is worth less than in 10 years. But the other side must agree to the swap. I argue that the devaluation should be against Bitcoin, and it can be done unilaterally and ultimately will have the same effect.

My plan:

Step 1: The Statement

Bessent gives a speech where he declares the intention of the US to rework the global reserve currency system such that USD is the invoiced currency, but the reserve asset is Bitcoin.

Step 2: Progressive Devaluation

The Treasury will bid for Bitcoin in dollar terms above the current market price in such a way that, over time, the total market cap of Bitcoin is large enough to facilitate the role of a global reserve asset. To put this into context, if Bitcoin were to become as large as the treasury market, Bitcoin’s price must rise to $1.8 million.

Example:

If BTCUSD = $100,000, Bessent says they will buy BTC at $200,000. The wrinkle is that instead of giving sellers cash USD, he gives them a 100-year zero-coupon bond on the chain (a century bond). He also allows anyone who provides suitable information about themselves to repo the bond for cash at par with no interest on a rolling one-year basis. Effectively, a BTC seller gets USD, but it’s in the form of a loan. The seller’s real asset is a century bond.

Market Reaction:

Because Bessent is buying BTC above the spot price, an arbitrage is available. A trader can borrow USD, buy BTC spot below the Treasury’s bid, sell it to the Treasury for century bonds, repo the century bonds for USD, and then repay the loan. Because this is done on-chain, anyone globally can conduct the trade, and BTC will quickly rise to Bessent’s bid price.

Criticism:

Why would a BTC hodler sell BTC for a dogshit century bond? Because the price is high. It’s the same reason people think handing BTC to BlackRock is a great idea. If the price is right, most ideals and common-sense wash away.

Step 3: Term Out Treasury Debt

The Treasury now has BTC on the asset side and century bonds on the liability side. The market will expect Bessent to raise his bid again and front-run him. Now, the Treasury can sell its BTC at a profit for USD. Imagine the market trades to BTCUSD = $300,000, but Bessent bought BTC for $200,000. This $100,000 profit can be used to buy back 10-yr treasuries. In effect, step by step, Bessent can lengthen the weighted average maturity (WAM) of the national debt.

Holders of treasuries will not be disadvantaged because they know Bessent will use trading profits to purchase off-the-run treasury bonds. This is crucial because it keeps TradFi institutions that use treasuries as collateral and pricing mechanisms for loan solvency.

Step 4: Social Media Bank

To further cement the role of the USD outside of China, where the large US social media platforms are banned (Facebook and X), Bessent encourages Zuck (CEO of Facebook) and Musk (CEO of X) to allow USD stablecoin transfers within their apps. Obviously, they should use Ethena’s synthetic USDe. Now, the entire world, and most importantly, the global south, where Facebook, WhatsApp, and Instagram are the primary ways of online communication and commerce, will be USD-banked. This completely nullifies any attempt by these nations to de-dollarize. And there is nothing the leaders can do to stop it because there will be a revolution overnight if they try to take away the digital dopamine of the plebes. The US can’t even ban Chinese-owned TikTok because the youngins will torch any politician connected with the ban in the next election.

As surpluses of digital dollars build up in the system at a grassroots level, these can be saved in Bitcoin or other cryptos. And if the price of Bitcoin progressively rises, small holders will be enticed to sell BTC back to the Treasury for century bonds. Now, instead of a few nations owning US debt, it is owned by the global unwashed masses. Herding a few cats is hard; herding a few billion cats is impossible. That is to say, holders of debt will be less likely to all run for the exits at the same time. Ultimately, the Treasury wants holders of its debt to have sticky fingers.

Tech Blueprint

Whatever World Liberty Financial told investors they were building; this is what they should be doing. In case you don’t know, World Liberty Financial (WLF) is the crypto outfit associated with the Trump family. The goal here is to bring about immediate change for the benefit of the US Treasury by utilizing Web3 and WLF to help build the infrastructure. This disintermediates the large Too Big to Fail Banks, but what have they actually done for the empire other than cause financial crisis after financial crisis, require printed money to bail them out, and ultimately create the monetary inflation that destroys the soul of the empire? Just take a stroll around the fiat finance capital of Pax Americana, New York City. The nightclubs are lit, but depressing scenes of poverty, homelessness, and crime punctuate everyday life. It’s a fucking shithole. Brought to you by JP Morgan & Chase.

The Web3 tech stack should be powered by a public blockchain. Y’all know what is coming. Always Be Closing! In that spirit, Aptos is the best choice. It is the fastest (800ms), cheapest ($0.00005 per transaction), and most reliable (99.99% uptime) public blockchain that can be used for high-performance financial transactions. And it shows. Aptos is quietly closing in on the top 3 networks with the most institutional assets on-chain, according to RWA.xyz, and boasts partnerships with institutions like Franklin Templeton, Brevan Howard and Microsoft. Its MOVE architecture was specifically designed in-house at Facebook to handle financial transactions for the world’s largest social network.

Maelstrom does not fuck for free. To be clear, we own large amounts of Aptos and Ethena.

The US Treasury needs an on-chain exchange where digital dollars, century bonds, and Bitcoin can be traded.

First, the Treasury needs a digital dollar. Tether’s USDT and Ethena’s USDe should be the accepted digital dollars. USDT is just a dollar custodied in the US banking system. USDe is long crypto plus a short perpetual swap, which creates a synthetic dollar; all assets are custodied at large crypto exchanges. Politics is about jobs for the boys, and so how does the existing government benefit from choosing these two solutions? US Commerce Secretary Howard Lutnick has an equity stake in Tether. WLF owns millions of dollars’ worth of the Ethena governance token $ENA. Both Tether and Ethena equity and token holders would benefit if they were chosen as US Treasury-approved digital dollars. Self-interest is what makes human civilization go round and round.

Second, the Treasury needs to tokenize century bonds. The Treasury issues a token representing each bond (TSY100). TSY100s become available when purchased with wrapped Bitcoin on Aptos (you can already wrap Bitcoin using Wormhole, Celer, and Layerzero). Next, a repo facility where TSY100 can be staked and a USDT or USDe loan is created.

Note: Technically speaking, the Treasury cannot create USDT or USDe. Therefore, if the staker wants USDT, the Treasury has to mint USDT by wiring dollars into Tether’s bank account. If the staker wants USDe, the Treasury has to mint USDT and then mint USDe; this can all be done as atomic transactions using APIs offered by Tether and Ethena.

Third, the Treasury needs to set up a permissioned Web3 money markets exchange, let’s call it EagleSwap. The Treasury already has an authenticated service called ID.me (this is just one example of an online identity verification service). This service can be expanded in such a way that any user globally can sign a message that adds an Aptos wallet to a whitelist. When you connect your Aptos wallet to EagleSwap from your desktop or mobile, if you are whitelisted, you are allowed to swap between USDT, USDe, TSY100, and wrapped Bitcoin. EagleSwap will quickly become the most liquid place to trade these instruments because Bessent is swinging the biggest fiat dick in the world to and fro, buyin’ and sellin’ Bitcoin, USD, and treasury bonds.

The next phase of connectivity is between the US Treasury and Broligarch-owned social media platforms. Facebook and X are the two prime social media candidates to roll out a crypto-enabled wallet to their global user base. By connecting their users to EagleSwap in an abstracted fashion, their users can now transfer, trade, and store digital dollars, century bonds, and wrapped Bitcoin. The most pressing need of the global south is to conduct commerce outside of their TradFi banking system in dollars. The US dollar is a shitcoin, but most other fiat currencies have Marburg Ebola. Again, the connective tissue should be built using Aptos.

The Broligarchs are definitely in charge, judging by their primo seats at Trump’s inauguration. They need to take the next step and kneecap the parasitic TradFi banks.

I’ve discussed unilaterally devaluing the dollar and the technology to implement this policy. Next, I will discuss why America can, if it enacts the right legislation, have an unfair advantage regarding the “production” of the neutral reserve asset.

Neutral Reserve Asset

For this solution to be palatable to the elites who run Pax Americana, America must have some unfair advantage when it comes to the mining of Bitcoin. To mine Bitcoin, one must burn energy to solve random puzzles. The first question is, does America have cheap, abundant energy?

When it comes to the production of energy, America has two things going for it. The first is that vast deposits of untapped hydrocarbons are enclosed within the imaginary squiggly lines that humanity calls America. All that is needed is the capital and approvals to drill. The best part about drilling for energy that ultimately will power Bitcoin mining farms is that it doesn’t matter where the energy is located. Usually, energy is located far away from the population centers it serves. Transportation of hydrocarbons sometimes is more costly than the marginal cost of drilling for it. But if you feed the hydrocarbons to a powerplant onsite that just supplies electricity to mine Bitcoin, then you don’t have to pay for transportation. There are lots of remote places with lots of energy that, instead of building politically fraught pipelines and access roads to ship out the hydrocarbons, can just erect a local power station and Bitcoin mining farm. The state of Alaska, which is in a remote location, is rich in hydrocarbons and cold most of the year. It is the perfect place for Bitcoin mining farms powered by trapped energy.

The second thing that America has is a commitment to capitalism. I’m not saying this is morally good or bad; it is just a statement of fact. America is a nation founded by a group of tax-dodging slavers who created a constitution that guaranteed their capital would be compounded over time and allow their descendants to remain in charge economically and politically. What better place to start a multi-year project than drilling for hydrocarbons and mining Bitcoin?

Another bonus is the buildout of semiconductor fabs domestically in America. Taiwan Semiconductor is almost finished with a few state-of-the-art fabs in Arizona. Other foundries will be heavily encouraged to build fabs in America with government subsidies and tax breaks. Bitcoin ASIC chips can be produced domestically, so there will never be a shortage if global demand rises substantially with the price.

There is one massive problem: while fiat capital receives world-class treatment in America, Bitcoin and cryptocurrencies do not. What is needed is support for Bitcoin and crypto at almost the constitutional level. Bitcoin miners cannot engage in any sort of censorship, but there is a possibility that legislators may require that of miners and or node operators. Public cryptographic ledgers need to become a form of protected speech. That makes sense because a public blockchain is a chain of digital immutable speech hosted on a decentralized network powered by miners burning electricity.

If America wants to be the best place to mine Bitcoin, a simple less than two-hundred-word bill needs to be enacted:

“Cryptographic currencies and tokens that reside on or are powered by a blockchain are forms of protected speech. All laws applicable to the protection of free speech are applicable to users or intermediaries of public blockchain technologies. Cryptocurrencies and public blockchains are private and no government agency may compel an intermediary, participant, or the node operators of the blockchain itself to collect and produce data about participants and transactions.”

With a pro-energy administration and the passing of a pro-permissionless innovation crypto piece of legislation, America will have the requisite ingredients to bring a large part of the global crypto activity within its borders. Given the heavy CAPEX of energy production and ASIC chip fabrication combined with the liquid fiat capital markets with legal protection for the operation of a peer-to-peer decentralized network, America will be the home of the majority of the Bitcoin network hash rate. Then, the neutral reserve asset will effectively be produced within American borders.

Finally, it would be very difficult to reverse such legislation. As much as certain politicians rail on the negative influence of large technology and social media companies, there is scant progress in rescinding Section 230 of the 1996 Communications Bill, which granted tech platforms immunity from the content and activity hosted and conducted on their networks. The status quo is just too profitable. A similar marriage of convenience would be formed between crypto and politicians, and crypto companies and individuals who badly need high-paying jobs and an increased tax base.

The Hodler

If Bessent engineers a rise of Bitcoin to over $1.8 million, it will create some of the wealthiest people in human history. Some of the largest holders of Bitcoin reside in America or are American-domiciled companies. Less than a year after the launch of its Bitcoin ETF, BlackRock holds close to 600,000 Bitcoin, worth almost $60 billion. Given that American political power is largely predicated on wealth, this cohort will be able to exert a large political influence. If the Republican party enacts these measures, crypto hodlers will be loyal supporters for many years or decades.

Remember, a politician’s goal is to get re-elected. Apart from Trump, all those who subscribe to his brand of politics will be re-elected in 2026 or 2028. What better way to ensure you stay in power as a Republican politician than to make American crypto holders extremely rich while furthering the hegemony of the dollar?

Global Reaction

Will other large surplus countries accept that Bitcoin replaced treasuries as the reserve asset?

Yes.

Bitcoin has many benefits over treasuries, assuming the market cap becomes large enough to support trillions of dollars’ worth of trade.

1. Bitcoin’s code cannot be unilaterally changed by anyone.
2. Even if some US-based miners tried to hard fork the blockchain, and exclude certain transactions or change the total amount of Bitcoins ever to be mined, it would result in Bitcoin crashing to zero on their new chain, and all their assets would become immediately worthless. The economic game theory underpinning the Bitcoin blockchain dictates this will not occur.
3. Bitcoin can be permissionlessly accessed and traded anytime, anywhere, with an internet connection.
4. Bitcoin is the purest monetary energy derivative humanity has imagined. Therefore, it will preserve the energy value of trading surpluses over time.

No nation, not even China, wants to be the global reserve currency issuer and have its bond market serve as the global reserve asset. The natural result is the open capital account requirements and the adverse effects that are produced for the majority of the people when you stop producing anything real and just engage in financial engineering. That certainly isn’t “Common Prosperity”. Therefore, a system which retains the dollar for trade, or even bi-lateral exchange of local currencies, but surpluses get saved in Bitcoin is an improvement for everyone … except the Too Big to Fail TradFi financial institutions who watch their power and prestige wane and that of decentralized finance wax.

Wish Granted

Stacking sats is my game, and I hope yours is too. Therefore, if you find yourself at the genie’s table, dressed to impress, please wish for the right things.

Postscript

Crypto folks are some of the smartest humans in existence and some of the most naïve, but Trump is offering a crash course in politics.

The run-up for $70,000 to $110,000 in under sixty days was predicated on every crypto person getting every wish granted regarding how crypto would be regulated within Pax Americana. The first problem with this thinking is that in a two-sided exchange of value, you always want to receive your goods first and pay later. Trump and the Republican party got what they wanted from crypto first: enough votes to win the Presidency and obtain a party majority in the House and Senate. Now it comes time to “pay up,” and they aren’t on the same one-second candle timeline as we degen speculators.

I say that because Trump is creating working groups, Senate subcommittees and not acting. When Trump wants to act, he acts. A 25% tariff on America’s biggest trading partners was announced and implemented within days. The removal of ESG and DEI policies within government agencies came swiftly. I cite these as examples to prove not that Trump won’t do something positive for crypto, but that crypto regulation or a Bitcoin Strategic Reserve is not his or the party’s top priority. That’s a shame because, on the margin, the crypto single-issue voter put them in power.

As the global community quickly realizes that politics in America didn’t change that dramatically just because Trump got elected, the price of cryptos will fall to levels seen in the fourth quarter of 2024. My call for a retest of $70,000 to $75,000 Bitcoin still stands.

What could snap crypto out of this funk? Some form of money printing by the Fed, the US Treasury, China, Japan, etc., or concrete legislation that allows permissionless crypto innovation. A Frankenstein crypto bill will benefit Coinbase, BlackRock, and stonk investors. But for us crypto degens, that will not propel the market to new heights. It will not further the goal of decentralizing anything and everything. It will be an affront to the Lord, and the punishment will be swift and severe.

There is hope, get off your ass if you are an American crypto hodler and let your elected representative know you will not stand for politics as usual. Send them an email, write them a letter, or visit their local office. Politicians are very responsive to those who show interest in policy. If you think a Bitcoin Strategic Reserve is necessary, raise fucking hell right now, don’t just like a comment on X. The problem is that our digital devices allow us to rage inside of our own echo chamber, but encourage little, if any, concrete action that requires a bit of effort in the real world. Everything you actually value came at some sort of cost. There is no crypto political easy button — open your eyes, and watch out below.

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[1] Please refer to the monthly US Treasury TIC database.

[2] A repo or repurchase agreement is a loan where one side swaps an asset like a bond with another side for cash at a rate of interest. At maturity, the bond and cash swap back to the original holders.