Chris Skinner
The Bloomsbury Intelligence and Security Institute (BISI) produced a document yesterday about the risk of cryptocurrency to democracy. Seriously? Cryptocurrency is a libertarian dream that gives all of us a democratic vote. What risk is there?
Well, let’s dig into the details, as this is not about “innovation in payments” or “the future of money”. It’s about power.
Every time we talk about crypto, we frame it as a technology shift from blockchain to decentralisation to tokens to whatever the buzzword of the week is. But the report makes a far more uncomfortable point. Cryptocurrency is all about a shift in who manages money, who sees money, and ultimately, who controls society … and that’s where it gets dangerous.
Start with the obvious but rarely said out loud: crypto and politics are getting into bed together.
Not metaphorically. Literally.
Way back when, the whole idea was libertarian. Crypto was all about being decentralised, democratised, and disruptive. According to BISI, that has all changed because politicians are now investing in crypto; political movements are experimenting with it; lobbyists are pushing it; and, suddenly, the people who should be regulating the system are financially incentivised not to. We’ve seen this movie before in banking. It never ends well. Remember 2008?
Then there’s the transparency problem or, more accurately, the lack of it.
Democracy runs on visibility. You’re supposed to know who is funding political parties, where influence comes from, and how money flows through the system. That’s the social contract. Crypto tears that contract up. It creates a world where money can move instantly, globally, and opaquely. That is the critical point. Money moves under the radar for good and bad purposes.
It is not fully anonymous, but opaque enough to matter. Enough to obscure intent. Enough to blur accountability. So now ask the obvious question: what happens when political donations go dark? What happens when influence is funded by wallets, not institutions? What happens when that funding crosses borders in seconds?
You don’t get transparency. You get plausible deniability.
This leads to the geopolitical angle, which is the bit that most people underestimate.
We’ve spent the last decade worrying about cyberattacks, misinformation, and social media manipulation. Fair enough. But crypto adds a new layer: financial interference at scale. It’s nothing about hacking systems. It is all about funding outcomes.
The report points to scenarios where hostile states can route money into political ecosystems abroad, quietly, continuously, and with minimal friction. No SWIFT messages. No correspondent banks. No obvious trail.
Just wallets.
At that point, you’re not talking about “financial innovation”.
You’re talking about programmable influence.
Now zoom out even further.
Because this isn’t just about elections. It’s about the architecture of the global financial system.
For decades, the world has run on relatively centralised rails – SWIFT, central banks, dollar dominance. Imperfect, political, sometimes weaponised … but visible. Now, today, crypto offers an alternative system that is fragmented, borderless, and far harder to control. That sounds great if you believe in libertarian utopia, but it sounds terrifying if you believe in coordinated governance, because what you may actually end up with is not one global system, but competing monetary networks: digital blocks aligned by ideology, geography, or power.
It is not decentralisation. It is fragmentation.
Then, here’s the twist that most crypto evangelists won’t like: the more this grows, the more governments will react, and their reaction will be hard because states will not tolerate losing control over political funding, monetary sovereignty, or systemic visibility. They just won’t.
So, expect the clampdown:
- restrictions on crypto political donations;
- tighter surveillance on wallet activity; and
- clear dividing lines between “regulated crypto” and “outlaw crypto”.
- In other words, the dream of a free, open, decentralised financial system collides with the reality of nation-state power, and guess who usually wins that fight?
The same features that make crypto powerful – decentralisation, pseudonymity, borderlessness – are the features that make it politically destabilising.
The bottom line is that we are not just redesigning money but we are redesigning trust and, if you get that wrong, it’s not your payment system that breaks. It’s your political system.
BISI – Cryptocurrency: Technology Posing Risks to Democracy
In the article written by Abigail Darwish (BISI) and published under the title “Cryptocurrency: Technology Posing Risks to Democracy”, which Chris Skinner refers to in his article above, it is stated as follows:
Cryptocurrency is a digital currency secured by cryptography and operates independently of central banks or governments. In the wake of the 2008 global financial crisis, the climate of mistrust in banks, traditional financial institutions, and the government prompted unconventional financial methods to surge in popularity. One notable example is Bitcoin, which was launched as an alternative currency, providing a tool that could support peer-to-peer exchanges, without the need for intermediaries, through blockchain.
Impact on Democracy
Overlapping crises in recent years, such as COVID-19, global warming, wars and large-scale displacement of people, have created a precarious international environment. Within the context of this polycrisis, in which multiple and distinct crises occur simultaneously and interact to mutually reinforce one another, democratic institutions have come under increasing strain, contributing to the broader trend of democratic backsliding. Significantly, this political climate has produced conditions in which cryptocurrency, whose decentralised and largely unregulated nature makes it resistant to oversight, has become an increasingly attractive tool for those seeking to exploit its structural weaknesses for political and financial ends.
Cryptocurrency and financial misconduct
For governments, particularly those subject to sanctions, cryptocurrency’s untraceability has proven a valuable asset, whether as a target for state-sponsored theft or as a tool for sanctions evasion. As a result, cryptocurrency has become a constitutive part of contemporary authoritarian policymaking, functioning both as a means to sustain autocracies and to enrich their leaders. One notable example of this is the Lazarus Group, a North Korean state-affiliated cybercrime group. Since its operations began in 2007, Lazarus has stolen at least ~USD 3.4b in cryptocurrencies. It has effectively conducted sustained campaigns of theft, targeting exchanges and financial institutions internationally to circumvent sanctions imposed in response to its nuclear programme and generate revenue outside the conventional international financial system.
Similarly, in an effort to evade sanctions, governments of other authoritarian states have introduced and promoted their own cryptocurrencies. In 2018, for instance, Venezuela’s government had launched ‘the petro’, a state-issued cryptocurrency backed by a ‘commodities basket’ of the country’s oil reserves. Although Venezuela’s Congress outlawed the currency, stating that it had illegally mortgaged Venezuelan oil, its use subsisted and later became a mandatory method of payment for government document services and airplane fuel from 2020. When the scheme was liquidated in 2023, an estimated USD 3b was embezzled by government officials.
Most significantly, cryptocurrency as a tool for self-enrichment has been replicated in traditionally democratic countries. For example, the launch of the $TRUMP coin by a sitting president, accompanied by incentives such as offering private gala dinners to its largest buyers, represents a particularly salient case of a public office being used for private financial gain. A United States (US) House Judiciary Committee report claimed that Trump’s crypto holdings had reached as much as USD 11.6b, with income of over USD 800m from the sale of crypto assets in the first half of 2025.
This grey zone, wherein trends in crypto exploitation are evident in both autocratic and traditionally democratic models of government, is likewise apparent in Argentina. In February 2025, President Javier Milei publicly promoted the cryptocurrency project $Libra on X, a coin that had just launched, featuring imagery associated with his political movement, La Libertad Avanza. Shortly after Milei’s endorsement, the coin’s price surged, then fell as the project’s creators and a handful of insiders withdrew their holdings, causing the value to collapse and leaving over 70,000 investors empty-handed, with approximately USD 250m in investor funds lost. Recent findings by state investigators have suggested that payments of up to USD 5m were made to entities connected to Milei for promoting the currency, lending weight to the broader argument that democratic office is increasingly being leveraged for personal financial gain through cryptocurrency.
Cryptocurrency for political influence abroad
Cryptocurrency’s untraceability also makes it an effective vehicle for foreign actors seeking to covertly influence the electoral processes of other states. Unlike conventional financial transfers, which are subject to regulatory scrutiny and disclosure requirements, cryptocurrency donations can cross borders pseudonymously and in fragmented amounts. This can enable donors to circumvent disclosure rules and make it exceptionally difficult for electoral authorities to identify their origin without significant investigative resources. For example, a 2022 US State Department intelligence report alleged that Russia spent more than USD 300m since 2014 directing funds to political parties, officials and politicians in over two dozen countries, using cryptocurrency alongside other tools, including electoral bribery and cyberattacks. Further, in Moldova alone, illegal Russian financing during its 2024 elections totalled over USD 100m, channelled through cryptocurrency and other covert means.
In response to the mounting threat cryptocurrency poses to the integrity of democratic elections, several countries have moved to ban its use in electoral financing altogether, including Brazil and Ireland, which introduced such bans in 2019 and 2022, respectively. In the United Kingdom, the government announced an urgent review into foreign financial interference in December 2025 and, in March 2026, implemented measures, including an annual cap on donations from overseas electors and a ban on cryptocurrency for political donations pending adequate regulation. Similarly, in March of this year, the Canadian government proposed a new bill to formally ban political donations made in crypto.
Implications
Of all the threats cryptocurrency poses to democracy and democratic processes examined in this analysis, foreign electoral interference has prompted the most decisive and pre-emptive regulatory responses, with a growing number of countries moving to ban cryptocurrency in political financing to protect democratic integrity. Where such regulation has been slower to emerge, this has a realistic possibility of reflecting the domestic political incentives of crypto-friendly leaders and political actors who have accumulated personal wealth through cryptocurrency. For those individuals, closing regulatory loopholes carries a direct personal cost, and, by extension, there is a weak incentive to introduce regulation.
More generally, the rise of cryptocurrency has reinforced, and in some cases worsened, pre-existing power imbalances. The targeting of Moldova, a small state with a population of under 3 million, by a technologically and financially advanced adversary illustrates how this asymmetry operates in practice. At the same time, cryptocurrency has arguably introduced a new dynamic, blurring the lines between authoritarian and traditionally democratic governance since political actors in both models have used crypto for state or personal financial gain. Admittedly, this could be owing to the wider trend of democratic backsliding than to the technology itself, suggesting that cryptocurrency is fuelling, or again reinforcing, existing trends.
Crucially, though, whether democratic institutions retain sufficient independence and political will to act remains uncertain, particularly as the broader polycrisis continues to generate the conditions under which such exploitation is most likely to intensify. That said, this does not mean that cryptocurrency is inherently corrosive to democracy. The most acute vulnerabilities examined here are products of structural weakness and inadequate governance, issues that appropriate regulation can seek to address.
Forecast
Short-term (Now – 3 months)
It is highly likely that countries under significant economic strain will resort to crypto in order to circumvent economic restrictions (i.e., sanctions). For example, Iran has recently established a toll system in the Strait of Hormuz, payable via cryptocurrencies.
Medium-term (3 – 12 months)
It is likely that self-enrichment in cryptocurrency by political leaders, such as in the US, will continue. It is unlikely that the US will pass meaningful domestic crypto regulation in this period, given the conflict of interest inherent in a crypto-friendly administration overseeing its own regulation.
Long-term (>1 year)
It is highly likely that countries, particularly Russia, will continue to use crypto to influence foreign electoral outcomes. It is highly likely that additional democracies will move to restrict or ban cryptocurrency in political financing, especially from abroad. There is a realistic possibility that a crypto-based financial bloc could emerge, led by groupings such as BRICS, as part of a broader effort towards de-dollarisation.