Technologies tend to have a natural ceiling built into their utility and popularity. Once they’ve solved all the problems they can solve, their growth is effectively capped. As soon as all potato fans own a potato peeler, the peeler market’s growth potential is largely tapped out. Indeed, the big question around AI at the moment is how many problems it will be able to solve. The market could already be overblown, or it could be practically limitless.

What about stablecoins? They’ve grown from practically nothing at the turn of the decade to a market cap in the mid-12 digits and monthly transaction volumes in excess of $1 trillion. Citigroup expects the aggregate stablecoin market cap to hit around $2 trillion by the end of the decade. 

If we’re talking trillions, it sounds much more like AI than potato peelers.

But do stablecoins have a natural limit? Is their utility restricted to a certain range of problems? If so, where is it? How far can stablecoins grow, and what might stop them?

In order to find answers to these questions, let’s recall why stablecoins have come so far already, what will limit their future growth, and what that means for their overall utility, i.e. the range of problems they can solve.

Why Stablecoins Gained Market Traction

Three reasons for stablecoins’ current popularity stand out.

Stable Prices, Low Volatility

The first reason is price stability. Many cryptocurrencies are volatile, which makes them valuable for speculation but awkward to use as everyday currencies. The value of stablecoins is, well, stable. By definition. Price stability is their fundamental value proposition.

Price stability is also arguably an advantage relative to other cryptocurrencies whose value is perpetually expected to rise. If your coins’ value will double in five years, you might be reluctant to spend them now. But if your coins will be worth the same or even a little less in five years, you better spend them before they burn a hole in your pocket.

Greater Portability 

The second is portability. Exchanging fiat for crypto can be arduous, but exchanging one crypto for another is usually much easier. So many users find it more efficient to convert fiat into stablecoins in bulk, then easily shift value between various cryptocurrencies as needed. USDT is the most traded coin overall because it works so well on the other side of any crypto trade.

In many markets, these first two factors reinforce each other. Many countries’ national currencies depreciate more rapidly than stablecoins’ pegged currencies, so stablecoins give people in those countries a way to protect their wealth from depreciation. And those same countries often use currency controls to prevent capital flight, but their citizens can often access stablecoins to circumvent those artificial barriers.

Tax Optimization

The third reason is simply taxes. Many jurisdictions — including the United States, Canada, the United Kingdom, Japan, and Australia — classify cryptocurrencies as commodities rather than currencies. As a result, capital gains taxes apply to cryptocurrency price appreciation, so each transaction can be a taxable event. But many users and businesses might want to use crypto for its portability, like payment rails, so stablecoins’ price stability helps them avoid taxable events during routine payments.

You Can’t Copy State Money without State Rules

Fiat currency is the modern state’s crown jewel. Beyond a national currency’s symbolic value, controlling the source of everyone’s money is a very advantageous position. For an impression of what a big deal this can be, rewatch Ridley Scott’s Black Rain (it’s a great rewatch for any reason, not least of which is Michael Douglas rockin’ a killer mullet). 

If stablecoins are minting hundreds of billions of fiat equivalents and moving trillions in value each month, the state is going to take a very close interest in what they’re doing and how. You can’t open your own private mint moving that kind of liquidity and hope to stay under the regulatory radar.

Besides, history shows that states will regulate whatever they can. They have to. Any activity they cannot regulate implicitly threatens their claim to authority, and they don’t actually produce anything (besides perhaps regulation), so they need to acquire resources. In order to take their cut from an activity, states have to first quantify and control (i.e. regulate) that activity. This is the kind of argument that led Charles Tilly, one of the last century’s most respected historical sociologists, to call states “protection rackets” and “organized crime.”

Centralized activity is also why states preferred tariffs over taxes until pretty recently. Back when bureaucracies were small and populations were spread out, states found it very hard to tax income. They didn’t have the data to quantify it nor the technology to control it. So they preferred tariffs because there are far fewer ports and bridges than there are households and shops. 

In other words, the more centralized an activity is, the easier it is to quantify and control (and skim of course). More concisely: centralization attracts regulation. And the more central an activity is to state power, the more incentive the state has to regulate it, and printing money is about as central as it gets.

Stablecoins are no exception. They are centralized both in terms of the source of their value and in their actual operations, which is why regulators have been busy churning out rules lately. While that regulation might even be necessary and wise, it does and will limit stablecoins’ utility.

Rules, Their Effects, and Extrapolating the Future

The supply of regulation has increased a lot recently, but maybe it’s just meeting demand. In fact, Tether and Circle, the two biggest stablecoin issuers, are getting involved in the regulatory process with different strategies. They’re aware of their position as private USD mints and companies that take large amounts of private deposits and reinvest them (i.e. banks). Mature stablecoin issuers seem to want regulation.

The regulators themselves argue that stablecoin regulation is a good thing because it protects users and gives issuers “more predictable regulatory environments.” Not surprisingly, this is the view of the SEC. 

And this reasoning is not without merit. Companies managing hundreds of billions in liabilities should be able to meet those liabilities, and maybe someone should check. But the existing regulations have added some massive obstacles to where and how people can use stablecoins.

Let’s start with Europe, because regulatory legalese is the EU’s official language. The Markets in Crypto-Assets Regulation (MiCA) is the key stablecoin regulatory measure in Europe. It became law in 2023, but the consequences only really struck in Q1 2025. Since MiCA requires stablecoin issuers to obtain an e-money license in at least one European state, major exchanges like Binance and Coinbase delisted nine leading stablecoins, including USDT, the biggest stablecoin of all. (Of course, a consortium of nine too-big-to-fail European banks is trying to launch their own euro-pegged stablecoin.) 

MiCA was a regulatory nuke, practically banning leading stablecoins and seeking to replace them with astroturfed European alternatives.

Somewhat more friendly to experimentation and innovation, the USA has implemented the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act. GENIUS is a little more permissive in that the Treasury Department can determine that foreign stablecoin issuers are subject to sufficient regulation at home, sparing them the need for a local US presence. It also prescribes a few particulars like reserve requirements and public disclosure. 

While the GENIUS Act formally restricts issuers and protects users, it also makes issuers subject to the Bank Secrecy Act to prevent money laundering. As anyone knows who’s ever bought crypto on an exchange, AML and KYC are significant friction, and they effectively restrict how holders can use stablecoins. Eliminating exactly that friction was one of the features that made stablecoins attractive in the first place. Greater consumer protection might increase stablecoins’ utility in the long-term aggregate, but a user who wants to buy and trade USDT right now might disagree.

And while the EU and the USA are arguably the most important markets for stablecoins, many other markets either have regulations in place (e.g. Japan, Canada, Chile) or in the pipeline (e.g. the UK, China, Australia, Brazil, Turkey). 

Imagine a giant Venn diagram of all these regulatory regimes, and stablecoins’ utility is in the space where they all overlap and the activity remains economical. How big is that space? And given that stablecoins are pegged to national currencies, which national administrations guard jealously, are these already diverse regulatory regimes likely to converge or diverge in the future?

The denser the jungle of regulations, the smaller and more isolated the clearings where stablecoins can flourish. They will still have a niche, but some niches are more niche than others. It’s unlikely that any stablecoin, based on a national or even regional fiat currency, will satisfy all the regulators in all the markets necessary to become a global currency. That’s probably why real-world stablecoin usage ends up being far more geographically constrained than the “global digital dollars” many hoped for. Even USDT, the most widely used stablecoin, operates at scale in only a few permissive jurisdictions. With roughly 40% of USDT’s market cap and an effectively identical product, USDC faces the same structural limits.

Good as Far as They Go, but Bitcoin Can Go Farther

So stablecoins are centralized fiat tokens. Being centralized and tethered to state fiat means that regulators are grasping them tightly, resulting in cost and friction for everyone involved. This process is already well underway and will continue. Does this mean that stablecoins are doomed?

Probably not. As tokenized fiat, stablecoins are likely to thrive wherever fiat is good enough. In practice, that means conventional payments. I recently defined payments as instructions to clear a debt. Wherever an intermediated quid pro quo describes the interaction, stablecoins will probably work as the quid. Indeed, the potential to capture some of the payment business from other fintech solutions (or to defend their own) is probably why established fintech players like Klarna, PayPal, and Stripe have launched their own stablecoins or stablecoin accounts. Stablecoins are turning into normal payment fintech, but maybe just normal payment fintech.

Normal means subject to state regulations and the functional and geographic limits they impose. It means juicy fees going to intermediaries. It means friction for users. 

But there is a whole universe of value that eludes the payment model either because it requires direct, disintermediated transfers, it disregards political geography, there is no debt involved, or all of the above. The potential for value transfer is sometimes hard to see because the balkanized, intermediated payment paradigm is so dominant. We’ve simply lacked the technology to do much else until recently.

Still, whenever you toss some coins to a busker or tip a content creator, you’re pushing value, not clearing debt. Whenever cash moves from hand to hand, the transfer is disintermediated. Now imagine the busker is on the other side of the globe, and you discovered them through an app. The key to perceiving the rest of that value-transfer universe is to bring that directness and borderlessness into our digital world.

Value transfer needs less friction than fiat in both a technical and regulatory sense. But to achieve that, you’d need a currency that is detached from national currencies and decentralized. That’s where bitcoin comes in. Bitcoin is an open, decentralized, neutral monetary network that works for anyone, anywhere, anytime. If stablecoins have to get by in the clearings of the regulatory jungle, bitcoin floats breezily and limitlessly in the sky above.

Bitcoin was built on and for the internet, so it is natively programmable in ways that stablecoins can only vaguely approximate. And far from needing third-party custodians, bitcoin transfers are direct and disintermediated between the millions of users everywhere. The future stablecoins promise without much credibility is already the present for bitcoin.

It’s Easier to Win the Race without Hurdles

Utility is one of the central concepts in economics because it’s the mystic substance of decision making. People choose what they find most useful, and you know what’s most useful because it’s what people have chosen.

People are using stablecoins, which proves their utility. That usefulness isn’t going to go away, but regulation limits it. Stablecoins’ growth will stop where their utility is roughly matched by the friction that regulation induces. And the current state and probable future of regulation suggest that we’re getting pretty close to this equilibrium.

But since Bitcoin is not centralized and does not feed off state-based fiat currency, it is inherently harder to regulate and consequently attracts much less regulation. It’s also digitally native, which makes it a natural fit for a world of global commerce and value that flows frictionlessly across borders from one app anywhere to another. If regulation is what limits stablecoins’ utility and bitcoin is subject to much less regulation, it’s pretty clear who’s going to win the utility race. 

This is a guest post by Roy Sheinfeld from Breez. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

This post Stablecoins: Evolution, not a Revolution first appeared on Bitcoin Magazine and is written by Roy Sheinfeld.

The Bank of Russia has set out a new framework to regulate cryptocurrencies, proposing tiered access that would allow everyday investors to buy digital assets alongside professional market participants, while maintaining tight controls on risk and usage.

In a concept paper released Tuesday and submitted to the government for review, the central bank said both qualified and non-qualified investors would be permitted to acquire crypto assets, but under different rules, limits and testing requirements. 

The move marks another step in Russia’s gradual shift toward accommodating digital assets as sanctions reshape financial flows and market infrastructure.

Earlier this year, the Bank of Russia moved to allow domestic banks to conduct limited crypto operations under strict oversight. First Deputy Chairman Vladimir Chistyukhin said the central bank, while maintaining a conservative stance on assets like bitcoin, no longer sees a justification for fully excluding banks from such activity. 

It was also reported that Russia was using bitcoin to settle some oil trades with China and India, routing payments through intermediaries to bypass Western sanctions. 

So with that said, the current proposal maintains the central bank’s long-standing caution toward cryptocurrencies, which it continues to classify as high-risk instruments. 

The Bank of Russia warned that crypto assets are not issued or guaranteed by any jurisdiction, are subject to sharp price swings, and carry elevated sanctions and operational risks. Investors, it said, must fully accept the possibility of losing their funds.

A $3,800 cap for Russia’s retail investors

Under the framework, non-qualified, or retail, investors would be allowed to purchase only the most liquid cryptocurrencies, based on criteria to be defined in legislation. 

Access would be conditional on passing a knowledge test, and purchases would be capped at 300,000 rubles (around $3,800) per year through a single intermediary.

Qualified investors would face fewer constraints. They would be permitted to buy any cryptocurrency without transaction limits, provided they pass a test confirming their understanding of the risks. However, anonymous cryptocurrencies—defined as tokens whose smart contracts conceal information about transaction recipients—would remain off-limits.

Digital currencies and stablecoins would be formally recognized as monetary assets under the proposal, meaning they could be bought and sold. 

Their use as a means of domestic payment within Russia would remain forbidden, reinforcing the central bank’s position that crypto should not function as an alternative to the ruble in everyday transactions.

Cryptocurrency trading would take place through existing licensed infrastructure. Exchanges, brokers and trustees would be able to offer crypto services under their current authorizations, while additional requirements would apply to specialized crypto depositories and exchangers.

The framework also allows Russian residents to buy cryptocurrencies abroad using foreign accounts and to transfer previously acquired crypto overseas through Russian intermediaries. Such transactions would require notification to the tax authorities.

Beyond cryptocurrencies, the proposal extends to digital financial assets (DFAs) and other Russian digital rights, including utilitarian and hybrid instruments. Their circulation on open networks would be permitted, a move intended to help issuers attract foreign investment and give investors access to DFAs on terms comparable to crypto assets.

The Bank of Russia aims to complete the legislative framework by July 1, 2026. From July 1, 2027, it plans to introduce liability for illegal activity by crypto intermediaries, aligned with penalties for illegal banking operations.

At the time of writing, Bitcoin is trading at $87,555, with a 24-hour trading volume of $47 billion, down 3% over the past day.

The price stood about 3% below its seven-day high of $90,069 and roughly 1% above its seven-day low of $87,096. Bitcoin’s circulating supply was 19,965,971 coins out of a maximum supply of 21 million, giving the network a global market capitalization of about $1.75 trillion, down 3% from 24 hours earlier.

This post Russia Opens the Door to Bitcoin and Crypto for Retail Investors first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

In late 2025, Mark Karpelès, ex CEO of Mt. Gox, lives a quieter life in Japan, building a VPN and an AI automation platform. As Chief Protocol Officer at vp.net—a VPN that uses Intel’s SGX technology to let users verify exactly what code runs on servers—he works alongside Roger Ver and Andrew Lee, the founder of Private Internet Access. “It’s the only VPN that you can trust basically. You don’t need to trust it, actually, you can verify”. At shells.com, his personal cloud computing platform, he’s quietly developing an unreleased AI agent system that hands artificial intelligence full control over a virtual machine: installing software, managing emails, and even handling purchases with a planned credit card integration. “What I’m doing with shells is giving AI a whole computer and free rein on the computer”, a brilliant idea, really. AI agents on steroids.

The contrast with his past could not be starker. Fifteen years ago, Karpelès was the reluctant king of Bitcoin’s trading world, running Mt. Gox at a time when the exchange processed the vast majority of global bitcoin trades.

His journey began innocently enough in 2010. Operating a web hosting company called Tibanne under the brand Kalyhost, Karpelès received a request from a French customer based in Peru who was frustrated with international payment hurdles. “He’s the one who discovered Bitcoin, and asked me if he could use Bitcoin to pay for my services … I was probably one of the first companies to implement Bitcoin payments back in 2010”.

Roger Ver, an early evangelist, became a frequent visitor to Karpelès’ office. Unknowingly, his servers also hosted a domain linked to Silk Road—silkroadmarket.org—purchased anonymously with bitcoin. That connection would later fuel investigations: U.S. authorities briefly suspected Karpelès of being Dread Pirate Roberts himself. “That was actually one of the main arguments why I was investigated by U.S. law enforcement as maybe the guy behind the Silk Road… They thought that I was Dread Pirate Roberts”. The association complicated public perception and even surfaced in Ross Ulbricht’s trial, where, according to Karpelès, Ulbricht’s defense efforts briefly tried to cast doubt by linking Karpelès to the marketplace.

In 2011, Karpelès acquired Mt. Gox from Jed McCaleb, who went on to found Ripple and Stellar. The handover was marred from the start. “Between the time I signed the contract and the time I got access to the server, 80,000 bitcoins were stolen… Jed was adamant that we couldn’t tell users about it,” Karpelès alleged to Bitcoin Magazine. McCaleb faced no criminal liability for the Mt. Gox case, though he has been sued civilly and has been part of the public discourse around the case. Nevertheless, as far as Karpelès is concerned, he inherited a platform plagued by poor code and technical issues.

Mt. Gox exploded in popularity, becoming the primary on-ramp for millions entering Bitcoin. Karpelès maintained strict policies, banning users linked to illicit activities like drug purchases on Silk Road. “If you’re going to buy drugs with Bitcoin, in a country where drugs are illegal, you shouldn’t”, Karpelès told Bitcoin Magazine.

The Mt. Gox empire crumbled in 2014 when hacks—later tied to Alexander Vinnik and the BTC-e exchange—drained over 650,000 bitcoins. Vinnik pleaded guilty in the U.S. but was exchanged in a prisoner swap and returned to Russia without a trial, leaving evidence sealed. “It doesn’t feel like justice has been served,” said Karpelès, a moment that makes you wonder about the odd political value of Vinnik to the Russians. The 650,000 bitcoins stolen remain at large. 

The fallout was swift. Arrested in August 2015, Karpelès endured eleven and a half months in Japanese custody—a system notorious for its rigidity and psychological pressure. Early detention mixed him with colorful cellmates: Yakuza members, drug dealers, fraudsters. He passed the time teaching English, and inmates quickly dubbed him “Mr. Bitcoin” after spotting blanked-out headlines about him in newspapers given to them by the prison guards. One Yakuza even tried recruiting him, slipping a phone number for post-release contact. “… Of course I’m not going to be calling that,” Karpelès laughed.

The psychological tactics were brutal. Japanese police employed repeated rearrests: after 23 days, detainees were led to believe release was imminent, only to face a new warrant at the door. “They really make you think that you’re free and yeah, no, not you’re not free… That’s actually quite a toll in terms of mental health”.

Transferred to Tokyo Detention Center, conditions worsened: over six months in solitary confinement on a floor shared with death row inmates. “It’s still quite painful to spend more than six months in solitary confinement,” he recalled. Forbidden from letters or visits if claiming innocence, he coped by rereading books and writing stories—”the stuff I wrote is really crappy. I wouldn’t show it to anyone,” he said when asked if he would ever publish his writings. Armed with 20,000 pages of accounting records and a basic calculator purchased for his case, he dismantled embezzlement charges by uncovering $5 million in unreported revenue in the exchange.

Paradoxically, prison improved his health dramatically. Chronic sleep deprivation—often just two hours a night during his workaholic Mt. Gox days—gave way to regular rest. “Sleeping at night helps a lot… when I work I’m used to only sleeping two hours a night, which is a very, very bad habit” (00:22:18). Emerging physically transformed—”shredded,” as observers noted at the time—he surprised the Bitcoin community with fresh photos showing peak condition.

Released on bail after disproving key charges, Karpelès was convicted only on lighter record-falsification counts at the end of the ordeal. The Silk Road links had complicated perceptions, with Ross Ulbricht’s defense briefly attempting to implicate him to create plausible deniability for Ulbricht. Public narratives often painted him as complicit in Bitcoin’s dark side, despite his policies against it.

Emerging in 2016, rumors swirled of vast personal wealth from Mt. Gox’s remaining assets—once estimated at hundreds of millions or even billions due to Bitcoin’s price surge. Yet Karpelès says he receives nothing. The bankruptcy’s pivot to civil rehabilitation allowed creditors to claim in bitcoins, distributing value proportionally. I like to use technology to solve problems, and so I don’t really even do any kind of investment or anything like that because I like to make money by constructing things. To just get a payout for something that’s essentially a failure for me would feel very wrong, and at the same time, I’d want customers to get the money as much as possible.” Creditors, many now receiving far more in dollar terms due to Bitcoin’s rise, continue waiting.

Today, Karpelès collaborates with Roger Ver—the early visitor turned business partner—who recently settled U.S. tax claims for nearly $50 million. “I’m happy for him that he’s finally getting things cleared,” Karpelès said.

Today, Karpelès says he owns no bitcoin personally, though his businesses accept it as a form of payment. Discussing the current state of Bitcoin, he critiqued centralization risks in ETFs and figures like Michael Saylor: “This is a recipe for catastrophe… I like to believe in crypto in mathematics and different things, but I don’t believe in people”. On FTX: “They were running accounting on QuickBooks for a potentially multi-billion dollar company, which is crazy”.

From Bitcoin’s epicenter—hosting Silk Road links, onboarding the world, enduring Japan’s harshest detention—to building verifiable privacy tools, Karpelès’ arc reflects the industry’s maturation. His story marks the first roar of Bitcoin into mainstream culture, a time when his leadership as CEO of Mt. Gox placed him at the center of the storm. Clearest of all, his builder mindset remains a great example of the type of engineer and entrepreneur attracted to Bitcoin in those early days. 

This post Former Mt. Gox CEO Mark Karpelès Reveals Details of 2014 Collapse and Japanese Detention first appeared on Bitcoin Magazine and is written by Juan Galt.

Ledn, one of the world’s largest bitcoin lenders, announced its Open Book Report, a reserves transparency benchmark designed to expose the kind of risk that caused the 2022 FTX-driven crypto crash. 

According to a press release shared with Bitcoin Magazine, “Traditional lenders (including Citi, JPMorgan, Wells Fargo, BNY Mellon, Schwab, and Bank of America) are reportedly entering the space amid a regulatory vacuum in terms of rehypothecation practices and proof of reserves.” With the passing of the GENIUS Act, which greenlit treasury-backed stablecoins, Wall Street now has a road to service the crypto market and even upgrade its own rails and infrastructure. 

But there are still those who call for clearer regulatory structure for crypto counter parties, Ledn points out that “Global rules on crypto capital requirements & proof of reserves remain in flux, with the US and UK refusing to implement Basel’s proposed framework,” adding that “IOSCO is pushing regulators to hold crypto custody and lending to the standards of traditional finance, yet almost no institution has disclosed how bitcoin collateral is managed, whether it’s rehypothecated, or what happens in a liquidation scenario.” 

John Glover, Chief Investment Officer at Ledn and former Managing Director at Barclays, explained that “If lenders do not have to disclose how they use client collateral, the clients become the leverage. We saw what happened when BlockFi, Celsius, and Voyager operated in the dark. The difference now is that the balance sheets are bigger.” He warned that “This is how we get a 2022-style lending crisis at institutional scale.”

Ledn’s Open Book Report, launched today, showcases “the industry’s longest-running Proof of Reserves,” according to the press release. The report exposes Ledn’s BTC loan book, collateral levels, and aggregate loan-to-value ratios. According to the report, the Network Firm LLP, a U.S.-based certified public accounting firm, independently audited & confirmed that 100% of collateral is held in custody.

The report also reveals “$868 million in outstanding BTC-backed loans, with 18,488 BTC in collateral posted, held 100% BTC in custody; all BTC collateral is held in on-chain addresses and/or custodial accounts.” Ledn’s average loan-to-value ratio stands at 55%, an aggregate LTV well below industry liquidation thresholds. Since 2018, the company has funded “$10.2 billion in lifetime loans across 47,000 originations.”

This framework looks to move the industry past one-off snapshots—starting with monthly disclosures and laying the groundwork for more continuous, real-time transparency over time. Unlike self-reported wallet addresses, Ledn’s approach combines monthly reporting on loan book metrics—including outstanding loans, collateral posted, and average LTV—with reporting from The Network Firm LLP. Ledn also maintains Proof of Reserves attestations on a semiannual basis (every two quarters), confirming that assets exceed client liabilities, with “Merkle tree methodology” enabling clients to confirm their balances were included.

While some companies have announced “proof of reserves” by publishing wallet addresses, Glover argues this falls short. “True transparency requires independent reporting, regular updates, and methodologies anyone can check,” said Glover. “Clients shouldn’t have to take anyone’s word for it.”

Ledn recently received a strategic investment from Tether and has an impeccable track record of protecting client assets across its loan originations, surviving the 2022 crypto lender crisis, and at least one other bear market before that. 

The press release warns that “as traditional financial institutions accelerate their entry into bitcoin-backed lending, Ledn’s Open Book Report establishes the baseline against which these new entrants should be held, before regulators mandate it.” 

This post Ledn Publishes Industry-First Monthly Loan Book and Proof of Reserves Data first appeared on Bitcoin Magazine and is written by Juan Galt.

The second Edition of the Bitcoin Medellin Conference is coming. The small but high signal conference is set in the City of Eternal Spring, Medellin, a tourism hot spot for the Latin American countries, featuring rich food, landscapes, music, and culture, famous for the charisma and beauty of its people. Medelling also hosts a large international community with a strong entrepreneurship and start-up culture. 

The Bitcoin Medellin conference will take place on January 16- 17, 2026, in Plaza Mayor, a large event conference space near the heart of the city. The conference will feature international grade speakers like Jeff Booth, Venture Capitalist and author of The Price Of Tomorrow, Oliver Velez, Wall Street Veteran, author and educator, Mike Peterson, Founder and Director of El Salvador’s Bitcoin Beach, Frank Corva, Bitcoin Journalist, among many other Colombian and international Bitcoin entrepreneurs. 

The conference will feature two days of talks on various dimensions of Bitcoin, such as mining, finance, self-custody, investment strategy, and so on. It will feature talks in Spanish and English. 

There are two tiers of tickets, General and Premium, that give attendees access to speeches and the event hall or access to VIP spaces and side events. Both tiers have a massive discount for Colombian residents, encouraging evangelism and attendance from locals, a common model in Latin America.

The VIP Speakers mixer access dinner was a highlight of the conference last year, hosted at a 5-star Argentinian restaurant with an all-star attendance. 

Colombia is an under-appreciated Bitcoin and crypto hub, with a double digit percentage of its imports from China paid in stablecoins a long standing Bitcoin and crypto community that has deep peer to peer and OTC market, if you are shopping for conferences next year, this is one you’ll want to have a look at.

This post Jeff Booth, Oliver Velez, and Bitcoin Beach Founder Mike Peterson to Speak at Bitcoin Medellín 2026 first appeared on Bitcoin Magazine and is written by Juan Galt.

Bhutan has committed up to 10,000 bitcoin to support the long-term development of Gelephu Mindfulness City (GMC), marking one of the most ambitious sovereign uses of bitcoin for national infrastructure and economic development to date.

The Himalayan kingdom unveiled the Bitcoin Development Pledge this week, allocating a portion of its sovereign bitcoin holdings — valued at roughly $860 million to $1 billion at current prices — to back the new special administrative region in southern Bhutan. 

Officials emphasized that the allocation is intended to preserve capital over the long term rather than fund near-term spending through asset sales.

Instead, Bhutan is exploring mechanisms such as collateralized lending, treasury and yield strategies, and intentional long-term holding to finance infrastructure and development while maintaining exposure to bitcoin’s potential appreciation. 

Final decisions on how the assets will be deployed are expected in the coming months, according to the government.

Gelephu Mindfulness City is central to Bhutan’s broader effort to diversify its economy beyond hydropower and tourism, while remaining aligned with the country’s development philosophy centered on sustainability and social well-being. 

The project, launched in 2024, is designed as a future economic hub focused on finance, technology, green energy, healthcare, agriculture, and high-value tourism.

The city spans roughly 1,544 square miles — about 10% of Bhutan’s territory — near the Indian border.

Bitcoin as a commitment to Bhutan’s youth

King Jigme Khesar Namgyel Wangchuck announced the bitcoin commitment during his National Day Address, framing it as a generational investment aimed at creating quality jobs and opportunities for Bhutan’s youth.

“As your King, I must ensure that every Bhutanese is a custodian, stakeholder, and beneficiary of GMC,” he said. “This commitment is for our people, our youth, and our nation.”

A new land policy associated with the project will treat landowners as shareholders in the city’s development, ensuring citizens across all regions share in the economic upside. Since much of the land involved is state-owned, the government says the benefits will be broadly distributed nationwide.

Bhutan’s bitcoin holdings stem from years of state-backed mining operations powered by surplus hydroelectric energy. Beginning around 2019–2020, the country quietly converted excess renewable power into digital assets, positioning itself as one of the earliest sovereign bitcoin miners. Officials say the strategy allows Bhutan to monetize unused energy capacity without increasing environmental impact.

Estimates of Bhutan’s total bitcoin reserves vary by analytics provider, ranging from roughly 6,000 to more than 11,000 BTC, placing the kingdom among the world’s largest sovereign bitcoin holders. 

The bitcoin pledge builds on a broader national blockchain strategy already underway. Bhutan has rolled out crypto-enabled payments across its tourism sector through partnerships with DK Bank and Binance Pay, allowing visitors to pay with more than 100 digital assets at hotels, airlines, and local merchants. More than 100 tourism-related businesses now accept crypto payments.

The country has also introduced TER, a sovereign-backed digital token reportedly supported by physical gold reserves, and recently anchored its national digital identity system on Ethereum, enabling nearly 800,000 citizens to access public services through blockchain-based verification.

GMC itself has designated bitcoin and two other crypto as strategic reserve assets, making it one of the earliest jurisdictions to formally hold multiple cryptocurrencies at the municipal or regional level. 

Green Digital Ltd., the infrastructure firm leading GMC’s development, is focused on green energy-powered data centers and blockchain infrastructure as part of the city’s long-term vision.

Earlier this month, Bhutan also entered a multi-year partnership with Cumberland DRW to support bitcoin reserve management, sustainable mining expansion, and broader digital asset infrastructure, including potential stablecoin initiatives.

At current bitcoin prices, 10,000 BTC would be worth $877,500,000.

CoinDesk reporting helped with the background of this article.  

This post Bhutan Pledges Up to 10,000 Bitcoin to Build New Mega-City first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

Over the last two months, the broader bitcoin market has bled to semi-surprising lows and it seems like fear has crept into the forefront of market sentiment. But Strategy’s Michael Saylor, in true Saylor fashion, just put his head down and bought more bitcoin. 

Over the past two weeks, Strategy has spent nearly $2 billion just on Bitcoin.

Strategy has steadily expanded their Bitcoin treasury over the years, now holding 671,268 BTC — equivalent to 3.2% of all Bitcoin ever expected to exist, the company says.

The firm’s average purchase price for its holdings sits at roughly $75,000 per BTC, with a total acquisition cost of $50 billion and a current Bitcoin net asset value of $60 billion. 

Strategy has added Bitcoin in every quarter since Q3 2020, totaling 90 separate acquisitions.

Per Bitcointreasuries.net, Strategy’s Bitcoin holdings tower over every other publicly traded treasury, owning 12 times the next largest holder, MARA Holdings. 

While most companies in the top 10 hold between 13,000 and 53,000 BTC, Strategy’s accumulation dwarfs them, underscoring its unprecedented scale of BTC holdings. 

Earlier this month, Strategy created a $1.44 billion cash reserve to safeguard future dividends and interest payments, in an effort to reassure investors it would not need to sell any of its roughly $56 billion in Bitcoin amid broader Bitcoin market weakness.

Funded by recent Class A stock sales, the reserve initially covered 21 months of obligations, with plans to extend to 24 months. CEO Phong Le said the move sharply reduced the likelihood of BTC liquidation, addressing fears from prior comments. 

Strategy wants more bitcoin: ‘We are going to buy all of it’

At the Bitcoin MENA conference, Saylor discussed his bitcoin beliefs more, saying that Bitcoin was the foundation of a new digital capital and credit era. Addressing sovereign wealth funds, banks, and investors, Saylor framed Bitcoin as “digital capital,” contrasting it with traditional assets like gold, real estate, and equities, and emphasizing its potential as a core store of value in the digital economy. 

Saylor emphasized the growing institutional adoption of Bitcoin, with major U.S. banks—including Bank of America, Wells Fargo, JP Morgan, and Citi—now offering custody solutions and credit against Bitcoin. 

He also cited bipartisan government support from agencies like the Treasury, SEC, and CFTC.

Central to Strategy’s vision is converting volatile Bitcoin into predictable, yield-generating credit. Through over-collateralized instruments like STRK (8% dividend) and STRF (10% perpetual bond), Strategy delivers steady cash flows while enhancing long-term Bitcoin exposure.

Saylor claimed these mechanisms allow the company to double Bitcoin per share every seven years, creating liquidity and aligning corporate growth with investor returns. He likened Bitcoin-backed credit to gold-backed financial systems, envisioning a global shift toward digital gold-supported credit integrated into traditional banking.

Earlier this week, news came out that Strategy will retain its spot in the Nasdaq 100 index despite an annual reshuffle that removed six companies and added three.

This post Michael Saylor’s Bitcoin Treasury Strategy Now Accounts for 3.2% of BTC Supply first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

On December 18th, days before Christmas, Keonne Rodriguez, co-founder of the Bitcoin Samourai Wallet, will have to surrender to prison. His crime? Creating a software tool that gave Bitcoin users comparable privacy to that which banks are expected to provide. Samourai Wallet, the brand and technology stack built by Rodriguez and William Lonergan Hill, was shut down by the U.S. Government in April 2024 on a variety of charges, including money laundering, but only one charge stuck after a high-profile trial, the weakest charge of all, “unlicensed money transmission”.

What does it mean to transmit money? According to prosecutors, custodial control over user funds is no longer a requirement to need an MSB license; “a USB cable transfers data from one device to another, and a frying pan transfers heat from a stove to the contents of the pan, although neither situation involves exercising ‘control’ over what is being transferred.” If the DoJ can indict a frying pan, then USB manufacturers better lawyer up! 

Remarkably, even FinCEN disagrees with the DoJ’s novel legal interpretation of what constitutes a money transmitter, as guidance at the time said non-custodial services could not be money transmitters because they do not exert control over money flows. FinCEN reasserted this fact to the DoJ prosecutors in a written statement, but they went forward with the charges anyway. This critical fact was withheld from the defense for almost a year, when it was finally revealed, “the judge denied the motion to present this evidence in the hearings, without even any argument,” according to Rodriguez. Critics argue this misconduct by the DoJ prosecutors is a violation of Brady v. Maryland, denying access to material that could have undermined the unlicensed money transmission charges, or, as Donald J. Trump would put it, this prosecution was rigged.  

Zack Shapiro, head of policy at the Bitcoin Policy Institute, warns the Trump administration and American software industry about the potential ramifications of this legal case, arguing that “collapsing the distinction between developing a tool and operating a service would introduce an untenable level of risk for anyone building privacy-enhancing or security-critical software.”

“Rodriguez and Hill ultimately accepted plea agreements in the face of substantial sentencing exposure, even though government records undermined the central regulatory theory of the case,” Shapiro added in a letter published on the BPI website, asking the Trump admin to pardon the Samourai Wallet devs. 

Fundamentally, the prosecutorial approach in the Samourai Wallet case risks establishing an influential precedent that threatens the financial privacy of American citizens and stifles innovation in the U.S. crypto industry. It could shape future prosecutions and regulatory developments, potentially reclassifying non-custodial services as money transmitters under federal law—requiring national MSB registration with FinCEN—and prompting stricter state-level licensing in jurisdictions like New York or California.

Echoing the trial against Ross Ulbricht a decade earlier, this rigged case against Samourai Wallet was set up during the Biden administration with support from anti-crypto politicians whom Trump defeated in the 2025 elections with the popular mandate. During his campaign at the 2024 Bitcoin Nashville speech, Trump said, “I will always defend the right to self-custody,” and got major support from the Bitcoin and crypto industries through the shared vision of making the United States the crypto capital of the world.

“I pledge to the Bitcoin community that the day I take the oath of office, Joe Biden and Kamala Harris’ anti-crypto crusade will be over,” – Donald J. Trump, Nashville 2024. 

Many libertarians in the broader crypto industry see entrepreneurs like Keonne Rodriguez and William Lonergan Hill, in the same category as Roman Storm and Roman Sterlingov of Tornado Cash and radio host Ian Freeman, as nothing more than political prisoners of an entrenched banking cartel. 

David Sacks, the venture capitalist and White House A.I. & Crypto Czar, should also pay attention to this issue; otherwise, what does it even mean to be the Crypto Czar? If Bitcoin wallets end up regulated the same as banks, despite having no counterparty risk, then whose interests are really being served, Mainstreet’s or Wallstreet’s?

While the Trump admin has been very conservative during the DoJ’s prosecution and trial of the Samourai Wallet devs — and perhaps, understandably so — that stage of the legal battle is over. 

It is time for the Trump administration to meet its promise to the American public and defend self-custody and the crypto industry in America. It is time for Trump to set the record straight and pardon Keonne Rodriguez and William Lonergan Hill, as well as the Tornado Cash devs, while we are at it, lest we have another Ross Ulbricht-style miscarriage of justice. 

The Bitcoin and crypto industry is well behind this effort and has begun gathering signatures at Change.org, totaling over 5000 so far and growing, with the only official fundraising campaign at GiveSendGo.

Should Trump pardon the Samourai Wallet devs, he would be sending a clear signal to those who want surveillance-based, central bank digital currency systems to enslave Americans and the world that Americans will not stand for it. That the United States stands with the fundamental human right to privacy, dignity, due process, and the presumption of innocence, and not the tactics of intimidation developed by the likes of Joseph Gorbles, where privacy is a crime. Mass, indiscriminate surveillance, without a warrant, without due process, that is the real crime. 

This post Why Trump Should Pardon The Developers of Bitcoins Non Custodial Samourai Wallet first appeared on Bitcoin Magazine and is written by Juan Galt.

Corporate Bitcoin treasuries faced mark-to-market losses in November, according to an exclusive Corporate Adoption Report from Bitcoin Treasuries. 

The report, covering more than 100 companies, offers a systematic look at how last month’s price drop affected public company holdings.

Bitcoin briefly fell below $90,000 in late November. The decline pushed many 2025 buyers into the red. Of the 100 companies for which cost basis is measurable, about two-thirds now sit on unrealized losses at current prices, per the report.

Despite the volatility, large balance sheets continued to dominate net Bitcoin buying. Strategy, Strive, and a small cohort of high-conviction buyers accounted for most net additions. 

Strategy alone represented roughly 75% of net new buying after sales.

Public Bitcoin treasury equities remain weak versus BTC and broad indices. Still, a minority of companies delivered at least 10% gains over the past 6–12 months. 

Early signs of corporate Bitcoin selling also emerged. At least five companies reduced BTC exposure in November. Sequans led the group, selling roughly one-third of its holdings. While small in aggregate, these moves suggest some management teams are willing to crystallize losses or de-risk when volatility spikes.

Quarterly Bitcoin accumulation is slowing, but not collapsing. Q4 2025 is on track for roughly 40,000 BTC in net additions to public company balance sheets. This is below the last four quarters but broadly in line with Q3 2024, as companies normalize to a slower, more selective accumulation pace.

In November, public and private treasuries purchased, added, or disclosed over 12,644 BTC in November and the total BTC held across all tracked entities surpassed 4 million by month’s end. 

Bitcoin purchases

Big treasuries know for their bitcoin buying continue to dominate purchases. Strategy added 9,062 BTC across three transactions in November, per the report.

Its largest buy, 8,178 BTC, came on Nov. 17. Strategy ended the month with 649,870 BTC, worth about $59 billion. Currently, the company has 660,624 after some December purchases. 

Strive added 1,567 BTC at an average price of $103,315 per BTC in November. The purchase brought its month-end holdings to 7,525 BTC, or $684 million. The company funds its Bitcoin strategy primarily through perpetual preferred equity.

Mining companies remain significant players. Cango and Riot added 508 BTC and 37 BTC, respectively, from mining operations. American Bitcoin added 139 BTC through combined purchase and mining strategies. 

Per the report, mining companies now account for 12% of public company BTC holdings.

Bitcoin selling and rebalancing

Sales were limited but notable. As mentioned earlier, Sequans sold nearly one-third of its holdings, to reduce convertible debt. Hut 8 reduced holdings by 389 BTC. KindlyMD and Genius Group also trimmed exposure.

Some companies added small amounts even amid the downturn. DDC Enterprise Limited picked up 100 BTC during the pullback. 

Metaplanet continued “additional purchase” filings on the Tokyo exchange. ETF flows returned to net inflows after a month of redemptions.

The data suggests a barbell pattern: small distressed sellers versus programmatic buyers and disciplined treasuries. Investors see BTC increasingly used as collateral or for cash flow, rather than just as a speculative asset.

Global trends and future outlook

Corporate Bitcoin holdings are increasingly global. U.S. companies dominate the top 20, but Japan, China, Europe, and other regions are growing. 

Non-U.S. public company holdings rose 3,180 BTC from two months prior, now representing about 9% of all public company BTC. Analysts say this geographic diversification reduces regulatory risk.

Despite November’s volatility, corporate adoption of Bitcoin continues. Large treasuries are still buying aggressively. The quarterly pace of accumulation is slower than earlier in 2025, the report noted, but steady growth persists. 

Those interested in reading the full report can do so below:

This post 65% of Corporate Bitcoin Treasuries Are Underwater: Report first appeared on Bitcoin Magazine and is written by Micah Zimmerman.

This piece is featured in the print edition of Bitcoin Magazine, The Freedom Issue. We’re sharing it here as a sample of the ideas explored throughout the full issue.

On November 3, 2025, the freedom for developers to build financial privacy software is on trial.

Samourai Wallet was a Bitcoin privacy wallet developed by Keonne Rodriguez and William Lonergan Hill. It included specialized privacy tools that mixed the coins of wallet users in ways that required no third-party custody. The service’s servers helped coordinate “mixing” — methods to conceal the origin of coins and offer users some degree of forward privacy.

Rodriguez and Hill were arrested on April 24, 2024, on two charges: conspiracy to operate an unlicensed money transmitting business and conspiracy to commit money laundering.

The U.S. Department of Justice (DoJ) accused the Samurai Wallet developers of facilitating over $2 billion in unlawful transactions through their cryptocurrency mixing service between 2015 and February 2024. Additionally, the DoJ alleges that the developers helped launder more than $100 million in criminal proceeds from illegal dark web markets, such as Silk Road and Hydra Market, as well as other hacking and fraud schemes.

The case of United States v. Rodriguez and Hill threatens the established precedents of code as speech on two major fronts.

The first regards the “$2 billion in unlawful transactions” accusation. The prosecution implies that software that aids or facilitates the movement of money in any way is indistinguishable from money transmission and that it requires a money transmitter license, even if that software never holds custody of user funds. This is entirely at odds with the dynamic that had previously been established by FinCEN’s 2019 guidance and other legacy financial regulations.

The second implication is that software that defends the privacy of communications or transfer of value is not protected speech under the United States’ First Amendment.

Code is Speech

The United States has a long and unique tradition of defending freedom of speech.

Over the years, many court cases have reinforced these values, creating precedents that let developers create great software and share it online. That kind of software has made the United States the technological epicenter of the world, from AI to cryptographic finance; the freedom to build software today is critical to the economic success of the nation.

Texas v. Johnson (1989), for example, established that burning the U.S. flag in protest was indeed protected speech even though the “speech” in this case was “functional”, i.e., expressed in the destruction of the flag. 

In the 1990s, with the rise of the internet, landmark cases like Bernstein v. United States (1996-1999) established that discussions about cryptography — specifically the sharing of source code involving cryptographic algorithms — was not a “munition” governed and regulated by the Arms Export Control Act and the International Traffic in Arms Regulations. On the contrary, the publication of source code explaining how cryptography worked was expressive speech and thus fully protected under the First Amendment.

The Bernstein case marked a critical victory for the Cypherpunks of the ’90s, whose contributions to open source software laid the foundations for Bitcoin: Many of the technologies that Satoshi Nakamoto used in its construction were indeed invented in the internet forums of the time. It was there that the Cypherpunks discussed the application of cryptography to the defense of freedom of speech, digital privacy, and civil rights. 

In the Universal City Studios v. Corley (2001) case, however, something shifted slightly. Jon Lech Johansen, a Norwegian teenager, wrote software that jail-broke copyrighted movies from software locks placed there by Universal Studios, making movies playable in Linux systems. Eric Corley, a U.S. journalist, published the software online, which led to a massive lawsuit spearheaded by Universal Studios. 

This landmark case turned on the question of whether something is speech or conduct in the realm of software. It established that when speech in the form of software gained “function”, such as the breaking of a DVD encryption lock, it suddenly became a tool and could become subject to regulation.

While Corley’s free speech protections were eventually reaffirmed in the Second Circuit Court of Appeals, the distinction between source code publications as a form of expression and functional software as a tool that can be regulated was established. 

Despite the rulings — Corley even removed the copy of the DeCSS piracy software from his website — the damage was done. Internet civil disobedience spread the software far and wide, and the piracy wars of the 2000s raged on for years. They demonstrated not just the limits of free speech protections but also the limits of trying to enforce digital censorship.

Information simply wants to be free.

The Samourai case could face a similar challenge, and it is unclear whether “code is speech” can be a sufficient defense for Rodriguez and Hill. 

Chink in the Armor

A controversial project that created as many loyal superusers as it did haters and critics is now on the front lines of the Biden-era lawfare, and the principle that code is speech appears to be at stake once again. 

As a result, it has forced critics — myself included — to rise to the defense of a wallet that, while quite successful in its adoption, made many design choices that were questionable and for which they may be judged harshly in the coming months.

One potential weak point in their defense is their alleged enabling of sanctioned parties to “launder money” through their coin-mixing service. The U.S. Attorney’s Office for the Southern District of New York (SDNY) went as far as to embed a screenshot of the Samourai wallet account welcoming sanctioned oligarchs:

Coin mixers are akin to the virtual private networks (VPNs) used by law-abiding citizens and criminals alike. For privacy to exist, one must be able to hide in a crowd, their choices and personal information shielded from prying eyes, and to be revealed or judged after due process.

With that, the Samourai Wallet founders did not make themselves a difficult target. If the allegations by the prosecution are true, and they knowingly helped dress up wolves in sheep’s clothing, then they likely will have to pay a price for violating sanctions doctrines. A deeply chilling legal precedent could then be set, shaping the future of digital finance and directly harming the proliferation of such technology in the United States. 

However, there may be hope in the change to a more crypto-friendly administration under the leadership of President Trump.

“I Will Defend Your Right to Self Custody” – Trump

During his keynote speech at the Bitcoin Conference in Nashville in 2024, Trump made a promise, one that he still has the opportunity to keep. 

He promised to “defend the right to self custody”.

Without financial privacy, self custody is dramatically weakened, as seen by the growing wave of physical attacks on Bitcoiners in recent years. The liberty previously enjoyed by software developers to build self-custodial Bitcoin tools like Samourai Wallet, is on trial.

The chilling effect

The U.S. government has, for the most part, learned not to attack an already hardened legal precedent like freedom of expression. However, by going after the developers and maintainers of Samourai Wallet directly, the DoJ had a net negative effect on financial privacy in the U.S., and it spread a chilling effect among Bitcoin software developers. 

Immediately following the arrest of Rodriguez and Hill, Phoenix Wallet, arguably the best self-custodial Lightning wallet in the industry, exited the U.S. app stores — a decision made to protect their business from a U.S. government that appeared hostile to Bitcoin self-custody software. (As of April 2025, Phoenix is once more available in the U.S.) Wasabi Wallet, another financial privacy software company, stopped offering its noncustodial mixing services to the public. And wallets like Blink from El Salvador geofenced American users from their app entirely. 

If Trump is going to really defend the right to self custody, and stop the eventual deployment of a central bank digital currency (CBDC) in the United States (another election promise), he will have to address the need for financial privacy in the digital era and reverse the injustices set in course by the Biden administration. 

In one way or another, these cases will leave a mark on his presidential legacy.

Foundations of a CBDC

The Biden administration continued to sue, scrutinize, and debank the crypto industry — a policy that started under Obama with Operation Choke Point and ultimately resulted in Silicon Valley CEOs losing access to their bank accounts altogether. 

A sharp example of permissioned financial rails being abused was also witnessed in Canada in 2022 when the bank accounts of truckers and donors were frozen during the Freedom Convoy COVID protests in Ottawa, following the invocation of the Emergencies Act by then-Prime Minister Justin Trudeau.

Furthermore, top U.S. officials from the Treasury have stated that central bank digital currencies (CBDCs) would need to have strong identity tracking, even while “balancing consumer privacy”, striking at a trade-off that’s sacrificing user privacy altogether:

“The Report notes that ‘a CBDC system could increase the amount of data generated on users and transactions,’ which would pose ‘privacy and cyber security risks, but … offer opportunities for proper … supervision and law enforcement efforts.’”

Among the ideals of justice and fairness laid out by the Constitution is one where the privacy of the individual is granted by default, where there is a presumption of innocence, and the prosecution must prove the accused’s guilt beyond a reasonable doubt.

The Fourth Amendment rights of innocent Americans who were using Samourai Wallet in particular are under attack by the kind of lawfare seen in the Samourai case:

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

Our homes are no longer just made of brick and stone, and our words no longer contained within those four walls. They are often digitized and transmitted, and so is the value they hold and move. Like cash in a sealed envelope, the use of financial privacy software naturally fits the protections of the Fourth Amendment, especially when no custody of funds is ever taken by the infrastructure facilitating its transit. 

Yet the few tools that protect this default access to privacy have been systematically attacked and undermined in the digital age, akin to the government suing envelope manufacturers as money launderers for obfuscating the contents of a person’s exchanges.

It’s actually much worse. While developers of privacy software like Samourai Wallet are harassed, legacy financial institutions, in their attempt to be compliant with KYC and AML regulations — the same class of regulations used to prosecute Samourai Wallet today — are forced to gather excessive private information from their customers in order to report anything “suspicious” to the authorities.

These KYC data vaults are regularly hacked. Indeed, it’s impossible to keep them secure as they grow in size and become targets for cybercriminals, which exposes everyday people to organized crime in the form of identity theft and fraud. By 2012 in the U.S, identity fraud cost more than all other forms of theft combined, reaching over $21 billion, and this figure rose to $52 billion by the 2020s.

This surveillance infrastructure is doing profound and irreversible harm to U.S. citizens and the legacy financial system as a whole. 

It is nevertheless sold as the necessary evil that stops money laundering by cartels and ends terrorist financing via sanctions through mechanisms like the OFAC list. And yet it is these same banks who are regularly busted laundering hundreds of millions of dollars for cartels, like TD Bank last year, which had to pay a record fine to U.S. regulators of $3 billion. It was accused of failing to surveil $18 trillion in transactions, of which close to $700 million was allegedly moved by drug cartels. Despite all the regulations and compliance, it turns out it was the banks that were doing the bulk of the money laundering.

When it comes to sanctions, meanwhile, Russia has received the worst lot of U.S. sanctions in recent memory, perhaps in history, including freezing its foreign treasury reserves. Despite that, Russia has run over major territories in Ukraine during the invasion and managed to survive long enough to be in a very strong negotiating position on the other side of the conflict — effectively marking the end of the sanctions foreign policy regime. It is no coincidence that the Trump administration is so focused on tariffs, overseeing the flow of goods across borders instead of the flow of money. 

Also, let us not forget that when it comes to terrorist financing, it was the CIA that funded and trained the Afghan Mujaheddin in the ’80s, training guerrilla operatives like Osama bin Laden, who later on helped create Al Qaeda and carried out 9/11.  

None of these crimes were done by Bitcoin or Bitcoiners. But the consequences of these laws weigh heavily on civilian populations. And the exponential growth of identity theft, the demoralizing ironies of the war on cash, the micromanagement overhead of the public’s finances, and the chilling effect on privacy-oriented software developers are the direct consequence of the KYC panopticon being constructed all around us. 

All these policies can be summed up as flash points in the war on cash, a broad policy strategy of the pre-Trump era, that I believe was meant to set a foundation for the deployment of CBDCs, a state monstrosity that Trump specifically promised to protect us from.

Lesson Learned

The biggest concern I had with the Samourai Wallet’s mobile app was its backend design. Ambitious and commendable as it was to try and bring cutting-edge, self-custodial coin mixing to the masses, in order to achieve it, Samourai Wallet made some questionable compromises — compromises which competitors and critics doubted were worth the upside and which can be judged in the trial as well. The most obvious problem was the way the mobile client was said to handle the xpubs of their users.

Xpubs are very important cryptographic information in Bitcoin and crypto wallets. Similar to IP addresses in the world of VPNs, xpubs represent a key piece of identifying information for Bitcoin users. Anyone who has your xpub can deterministically recreate all public addresses you ever had or ever will have in that wallet, allowing them to know exactly what public Bitcoin addresses are within your control and which funds have moved through them.

In the marketing and debates about VPNs — which are in some sense the early web’s equivalent to Bitcoin mixers — IP addresses, and whether a service can or cannot keep IP logs, is critical to their credibility among a savvy user base. Services often boast about their processes and procedures around not keeping their users’ IP addresses, which, if shut down — as Samourai Wallet has been — could end up in the hands of prosecutors, compromising the browsing history of their users.

In the case of Samourai Wallet and xpubs, a similar rule of thumb should apply. Internet users throughout the decades have discovered that paranoia about the quality of the tools and implementations pays off in the end. This lesson has been learned the hard way as VPN services and privacy-oriented email providers have been hacked or seized by government prosecutors. If there’s user data accumulated, the service can become a juicy target.

We don’t yet know what data Samourai Wallet had in the 17 terabytes confiscated by the U.S. government. Most of it is likely on-chain analysis done by their research arm OXT. But if user data was kept, then the privacy of many of those users might be at risk as well.

The Trump Legacy? 

It is fascinating that the future of software developers and their freedom to build private self-custody software will be judged and shaped in an age where Michael Saylor argues that the coin is not a currency and Trump, the self-branded crypto president, promises to protect your self-custody rights.

As Rodriguez and Hill stand trial, those wrapping themselves in the orange flag and those who can influence public policy about financial privacy will also be on trial in the court of public opinion; history will be their judge.

For us plebs who cannot influence public policy directly and can only judge the tools we use on their merit, there is a moral to this story. Compromising on privacy for convenience — to avoid the learning curve otherwise required — does not come without risk.

And on a long enough time frame, only the paranoid crypto-anarchists survive.

This piece is featured in the print edition of Bitcoin Magazine, The Freedom Issue. We’re sharing it here as a sample of the ideas explored throughout the full issue.

This post The Samourai Wallet Trial: A Test of Financial Privacy and Developer Freedoms first appeared on Bitcoin Magazine and is written by Juan Galt.