How Crypto is Reshaping Politics

The Rise of Bitcoin and Its Impact on Global Politics

Bitcoin has proven to be one of the best-performing assets in modern history. Over the last decade, its value has increased "some 1,000 times," which has led to a growing interest from governments and financial institutions. Since its launch following the 2008 global financial crisis, bitcoin was initially dismissed as a "speculative asset with no intrinsic value." However, it has since gained significant attention from various sectors, including governments, financial institutions, and investors. This shift has far-reaching implications for politics, the economy, and daily life.

Big Bets on Crypto

Several countries have made substantial investments in cryptocurrency in recent years. For instance, El Salvador holds more than "$600 million worth of bitcoin reserves" and has accepted the asset as legal tender from 2021 to 2025. In the United States, Donald Trump's return to the White House marked an optimistic shift in the recognition of crypto as a legitimate currency after years of government-led crackdowns on the sector.

In January 2024, the U.S. Securities and Exchange Commission approved bitcoin for spot exchange-traded funds (ETFs), which track real-time shifts in stock market value rather than futures. This move allowed investors "exposure to the asset on the stock exchange for the first time." Spot crypto ETFs also had "bipartisan support" in South Korea’s 2025 election. Lee Jae-myung, of the centre-left Democratic Party, the election’s eventual winner, said crypto funds would "provide more opportunities for South Korea’s younger generation."

Nigel Farage is an open "supporter of cryptocurrency" and has made Reform the first UK party "to accept donations in bitcoin," according to the BBC. A £9 million donation to Reform from Thailand-based British businessman Christopher Harborne, "the largest ever single donation by a living person to a British political party," has raised questions about the role cryptocurrency investors may play in future elections.

Ethical Quandaries

In Trump’s Washington, "crypto is ascendant," according to The Economist. Trump-appointed regulators are "more permissive," and investors are "piling into it," while pro-crypto lobbying groups are throwing their weight behind political candidates who support it. The president and his family also promote crypto. In January, the launch of the $TRUMP coin, a cryptocurrency mostly owned by "companies associated with the Trump family," pointed towards the president’s direct financial interest in crypto. But "clear conflicts of interest" could ultimately do "more harm than good" for the industry.

Trump’s crypto endeavours are just one of a "myriad of entanglements that government ethics watchdogs have warned about for a decade now," said The Guardian. One of the "primary worries" is the potential for "foreign actors to purchase influence" with the president via "investment in his cryptocurrency."

In the UK, ministers believe "donations made with cryptocurrency pose a risk to the integrity of the electoral system," according to The Guardian. It is particularly difficult to "work out" who controls or owns crypto wallets based abroad, opening the door to influence by "foreign powers or criminals."

Ministers are working on legislation that would ban cryptocurrency electoral donations, but the "complex nature of cryptocurrency" means that the proposal is unlikely to be ready in time for next year’s Elections Bill.