PCC & the new economic arms race
The world is changing fast – Trump is isolating the US from its former allies, withdrawing from multilateral agreements and moving the country onto a path of isolationism and deregulation. His administration has departed from the economic doctrine of his predecessor (Bidenomics), and he's treating America more like a streamlined corporation, slashing jobs, and recalibrating the market orientation, and challenging the very institutions America had strived to create.
In a post-pandemic world, the US is insulating itself from the global economy so that it can continue its plans for a radical domestic liberalization. Amid his deregulation drive, the inclusion of several cryptocurrencies (Bitcoin, XRP, Solana etc.) in the 'Digital Asset Stockpile' and the placement of Bitcoin (acquired through forfeiture proceedings) in the 'Strategic Bitcoin Reserve' signals strongly how the monetary system could evolve in due course. Amid these developments, Pakistan has officially launched the Pakistan Crypto Council (PCC) in March 2025. Although long overdue, it is a move in the right direction given these global developments.
A walk down the memory lane might help us draw some parallels to the current geopolitical economic developments that are happening.
As Winston Churchill once said, 'The further back you can look the further forward you are likely to see.'
These words remind us of the fact that history has its own way of repeating itself, even if it comes to economic or monetary history. In the 19th century, the US had more than 8000 bank notes much like the unregulated cryptocurrencies today that are highly volatile. The creation of the Federal Reserve in 1913 centralized the distribution of bank notes, essentially creating the dollar as we know it today. Later, the Bretton Woods Conference cemented the hegemony of the dollar by pegging other currencies to it. Another significant move changed global politics: the confiscation of gold from the American public by Franklin D. Roosevelt's administration and revaluing it higher to maintain economic stability.
The Petrodollar Agreement (1973-75) with OPEC countries was devised after the collapse of the gold standard. Under this arrangement, oil was to be sold exclusively in US dollars by OPEC countries. This helped maintain the dollar's dominance in the global economic landscape. These historic events have become more relevant today as Trump is initiating changes that could challenge the global monetary order.
As Bitcoin strikingly exhibits a volatility trajectory reminiscent of gold's early days, the emergence of a new global monetary order, where countries transition to Bitcoin or other cryptocurrencies, seems highly plausible. If such a shift is underway, will Pakistan seize this opportunity or be left behind the economic arms race?
Countries are increasingly moving away from petrodollars, as the world transitions to a multi-polar economic order. Digital currencies such as Bitcoin and XRP have already been widely adopted. El Salvador has already adopted it as legal tender, Russia and Iran leverages it to bypass sanctions, and China, while restricting domestic use, encourages crypto innovation via Hong Kong. Meanwhile, BRICS nations (Brazil, Russia, India, China, and South Africa) are actively exploring alternatives to the US dollar for international trade. In 2023, 90% of bilateral trade between Russia and China, amounting to $200 billion, was settled in local currencies, and could transition to digital currencies in the future. The Bank of Japan has just recently adopted XRP, another emerging cryptocurrency. The leader, it appears, will be the country that is quickest to embrace and integrate digital currencies.
Several nations are actively accumulating Bitcoin and other cryptocurrencies, with some incorporating digital assets into their national financial strategies. As of February 2025, the US holds approximately 207,189 Bitcoins, mostly acquired through seizures, a figure corroborated by mainstream financial sources such as Bloomberg and Reuters. China holds an estimated 194,000 Bitcoins, primarily through confiscations, followed by the United Kingdom with approximately 61,000 Bitcoins. Surprisingly, Bhutan, a SAARC nation, has emerged as the fifth-largest Bitcoin holder (13,000 coins), with its holdings valued at $1.1 billion as of February 2025 — constituting 35% of its GDP. While Pakistan still lags behind in this new economic arms race, the PCC's inaugural meeting on 21st March signaled early intent, with a proposal to mine Bitcoin using surplus electricity.
Bitcoin's fixed supply of 21 million enhances its scarcity, leading proponents to view it as a hedge against inflation. Elon Musk's recent remarks questioning the transparency of US gold reserves at Fort Knox have sensitized the debate over the reliability of traditional reserve assets. As Bitcoin reserves can be audited 24/7, its popular appeal has grown as a potential reserve asset.
If governments integrate Bitcoin into their economic frameworks, its value could surge exponentially, though regulatory and adoption hurdles would remain. Bhutan, for instance, has already established a significant Bitcoin reserve, which now constitutes 35% of its GDP. If the US and other nations take a similar approach, Bitcoin reserves could serve as a strategic tool for alleviating national debt — particularly relevant as the US grapples with its staggering $34 trillion debt burden.
In an unprecedented historical move, Trump addressed the Digital Asset Summit on 21st March 2025 — marking the first time a sitting US President has attended such an event. These developments clearly underscore America's intent to lead the global crypto arms race.
The geopolitical implications of the US establishing itself as the 'crypto capital of the world' would be profound. Central banks across the globe could race to accumulate Bitcoin, mirroring the historical rush for gold reserves. If the US succeeds, it would mark a new Bretton Woods moment. However, if it hesitates, another nation — or a coalition of financial actors—may seize the opportunity to define this transformation.
Nations like the UAE, China and Singapore are already trying to position themselves as digital asset powerhouses. In March 2025, a state backed firm in the UAE (MGX) invested $2 billion in Binance, the world's largest crypto exchange. This clearly demonstrates that the new crypto 'gold rush' has only just begun.
Pakistan already lags behind India in this new economic arms race. The blocking of the Virtual Assets Bill 2025, which was introduced in the Senate of Pakistan, signifies a step backward in this shifting financial landscape. India, on the other hand, has not only recognized virtual assets such as Bitcoin but has also established a taxation framework for investors. Under the New Income Tax Bill 2025, income from the transfer of virtual digital assets (VDAs) is subject to a flat tax rate of 30%, with capital gains also taxed at 30%.
Only time will tell how effective the PCC will truly be. Its success would largely depend on political and legal will coupled with the strength of its leadership and their technical expertise. Pakistan needs to build its own Bitcoin or cryptocurrency stock with the support of top-tier crypto experts. Ignoring this financial evolution could place Pakistan at a severe disadvantage while neighboring nations capitalize on digital assets. The time for regulatory clarity, investment in block chain infrastructure and digital financial integration is now — before Pakistan falls irreversibly behind in this emerging monetary order.
Copyright Business Recorder, 2025
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