crypto strategy

From the BPI to the Treasury: Bitcoin is a strategic asset for national security |

The BPI took up the challenge from the US Treasury Department. The Treasury requested public comment on the national security implications of digital assets, and the Bitcoin Policy Institute responded with a bombshell of a document. It explains bitcoin’s overall value as a tool for freedom. He compares bitcoin to classic US-funded initiatives like Radio Free Europe and the Tor network. It strikes a chord and makes the case convincingly.

To persuade people to read it, the BPI sums it up like that:

“Open digital assets that empower individuals can help advance the cause of freedom, thwart the goals of authoritarian adversaries, and advance a fundamental national security interest. Peer-to-peer systems like Bitcoin represent the essence of self-reliance, voluntary cooperation and the liberal values ​​on which our country was built.

On Twitter, one of the authors took a different approach. David Zell wrote:

“Today, the U.S. Department of the Treasury requested public comment on the national security implications of digital assets. In response, Matthew Pines and I submitted this report, detailing how bitcoin promotes U.S. interests and values ​​in the stranger.

We now know what we are dealing with. Let’s analyze the case of the BPI to see if it can convince us.

BPI compares Bitcoin to Tor

The BPI is leading the way in advocating for bitcoin as a whole:

“Bitcoin allows anyone in the world with an internet connection to store and send value in a way that cannot be reversed, frozen, or seized. It is open and permissionless. It is distinct from other crypto -currencies in that it is credibly neutral, largely decentralized, unchecked by one management or founding team, and optimized to resist censorship.

The bitcoin/Tor comparison might seem weird at first, but the BPI brings it home with these examples:

“Just as Tor has enabled tens of millions of people to see and access the freedom of open societies, Bitcoin enables tens of millions to escape the capital controls of authoritarian states and connect to the financial system. Just as Tor digitally enshrines and exports the right to communicate freely across the world, Bitcoin digitally enshrines and exports free trade and the right to transact.

BTC price chart for 11/04/2022 on Gemini | Source: BTC/USD on

The BPI recognizes the risks

In the risk section, the BPI seems to be throwing some altcoin projects under the bus. They acknowledge that “criminal groups (some state-sponsored) have dramatically increased the scale, sophistication, and severity of ransomware operations.” Next, the BPI claims that criminals are increasingly using Monero.

The BPI also admits that “revenues from hacking and theft are on the rise,” but they say they are “primarily driven by the dramatic increase in funds stolen from decentralized finance (“DeFi”) protocols.” True, but did the BPI have to write the following? “This part of the crypto ecosystem inherits the ‘move fast and break things’ ethos from Silicon Valley and their open source code is a ripe target for hackers to exploit and reap very large bounties.”

Last but not least, they address the elephant in the room, “The Lazarus Group (a hacking group controlled by North Korean intelligence) is the dominant exploiter of DeFi protocols.” But then the BPI blames “their use of the Ethereum-based Tornado Cash mixer to launder their stolen assets.” However, they are not celebrating OFAC’s decision to sanction the smart contract. The BPI wrote that the act “has precipitated widespread consternation in the crypto community and will likely be challenged in US court.”

To close the risk section, the BPI mentions sanctions and Russia:

“It is a common refrain that Bitcoin is a useful tool for rogue nations and entities to evade US sanctions. This concern was raised in the aftermath of Russia’s invasion of Ukraine, but so far no significant use of Bitcoin to evade sanctions has materialized.

Actionable Elements AKA Strategic Principles

The BPI left Treasury with a few simple, actionable things they called “strategic principles” to “mitigate risk, while maximizing the promise of these emerging technologies.” These were:

  • “A clean and balanced assessment of the broad implications of Bitcoin and other digital asset networks.” This technology is still relatively new, it is complex and requires mastery of a wide variety of subjects to even begin to understand it.
  • “Policy should not be narrowly defined to address a particular risk (e.g. illicit finance) without considering the broader strategic interests at stake.” Bitcoin is a complex subject, it touches on everything.
  • The BPI warns against “making premature and heavy-handed policy decisions that overweight apparent national security interests at the expense of open innovation and technology leadership.”
  • And they urge Treasury to recognize that “decentralized digital asset networks, by definition, have no leader or governing body and are likely to be underrepresented in the political process.” This is an extremely important point to emphasize.
  • To close it, the BPI gives the best advice to the Treasury. “Our cross-border tax policies and accounting rules should make it easier for U.S. entities to receive bitcoin as an investment and as payment for exports.”

This report is not only important for the United States. The leaders of each country should study it and adapt it to their realities. Bitcoin is so important.

Featured Image by Markus Winkler from Pixabay | Charts by TradingView

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