Crypto becomes infrastructure not money
Cryptocurrency markets have expanded to roughly $2.58 trillion, but digital assets are no longer viewed as a replacement for the dollar or a challenger to gold. Instead, crypto has evolved into a form of financial infrastructure, functioning primarily at the edges of the global economy rather than its center.
Infrastructure at the edges
This shift is visible in regions facing geopolitical constraints. Iranian officials and state-linked industry representatives have discussed proposals to collect a $1 per barrel tariff from tankers crossing the Strait of Hormuz, payable in bitcoin. According to Hamid Hosseini, a spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, vessels are given a few seconds to pay in bitcoin, ensuring they can’t be traced or confiscated due to sanctions. This creates a payment channel that is difficult to monitor or block, effectively embedding digital assets into a strategically important trade route.
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The failure of the currency thesis is evident when looking at basic economic functions. Cryptocurrency struggles to act as a medium of exchange due to technical bottlenecks and extreme price volatility. It also fails as a store of value because its price swings—exacerbated by four-year boom and bust cycles—make long-term holding difficult. Even as a unit of account, it remains tethered to the dollar, with markets priced in USD rather than in crypto itself.
Despite these shortcomings, digital assets have found utility in specific environments. In countries facing hyperinflation, such as Venezuela, citizens have turned to bitcoin to protect savings and buy essential goods. This utility is often practical rather than ideological, serving as a way to bypass capital controls and access foreign liquidity.
State actors have also adopted the technology. Following Russia’s exit from SWIFT after the invasion of Ukraine, crypto has facilitated trade with China and India. This move illustrates how crypto has evolved from a speculative retail phenomenon into a state-enabled settlement layer.
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The same networks that protect savings from inflation can also facilitate sanctions evasion and opaque transfers. This duality presents a challenge for regulators. The US Department of the Treasury has disrupted billions in projected oil revenue and frozen nearly $500 million in regime-linked cryptocurrency, but the decentralized nature of the technology makes enforcement difficult.
Stablecoins, which account for about 11.5 percent of the total crypto market capitalisation, offer a different use case. Worth roughly $320 billion, they function as a bridge between conventional finance and decentralized settlement. They allow users to access dollar liquidity without touching the formal banking sector, extending the reach of the dollar system rather than replacing it.
Central banks have responded to this shift by exploring their own digital currencies. As of July 2022, nearly 100 central bank digital currencies (CBDCs) were in research or development stages. The primary motivation for these initiatives is often financial inclusion, particularly in regions with large unbanked populations.
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A fragmented world
The global financial order is becoming less universal and more regionalized. Sanctions, tariffs, and technological decoupling have increased the incentive to develop parallel systems for trade and settlement. Crypto is unlikely to become the foundation of a new monetary order, but it is increasingly useful within fractured ones. In that sense, digital assets resemble financial adaptation tools: not strong enough to replace sovereign currencies, but flexible enough to operate around political constraints.
Tokenization projects are also moving from sandbox experiments to pilots. In America, five banks are moving onto an Ethereum-based tokenized deposit system. In Asia, the Hong Kong Monetary Authority is piloting real-value, cross-bank transfers of tokenized deposits with major institutions like HSBC and Standard Chartered. These developments suggest that while the original vision of a decentralized revolution has not fully materialized, the underlying technology is being integrated into the machinery of global commerce.
