Crypto moves beyond money to become digital infrastructure
Cryptocurrency markets have evolved beyond their original promise to become a form of financial infrastructure rather than a competing currency.
From Currency to Infrastructure
The idea that digital assets would replace fiat currencies or gold has not materialized. The US dollar remains the dominant unit of account for global trade, and gold continues to serve as a primary store of value. Despite this, the market for cryptocurrencies has stabilized at roughly $2.58 trillion, shifting focus from monetary theory to practical application.
Infrastructure use cases have become most visible at the edges of the global economy. This shift is evident in the Middle East, where Iran is proposing a novel method for handling trade tensions. Amid ongoing geopolitical friction, Iranian officials and state-linked industry representatives are discussing the collection of 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 only a few seconds to pay in bitcoin to ensure the transaction cannot be traced or confiscated due to sanctions. This creates a $2 million fee per tanker and embeds digital assets into one of the world’s most strategically important trade routes.
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This approach is purely pragmatic rather than ideological. It serves to bypass the dollar-based system entirely, creating a payment channel that is difficult for regulators to monitor or block. For Iranian authorities, the ability to bypass financial restrictions is a significant advantage, even if it means relying on a volatile asset class for revenue.
Utility at the Fringes
The inability of crypto to function as a stable medium of exchange has forced a reevaluation of its utility. While it fails as a store of value due to extreme volatility, it has found a niche in circumventing capital controls. In Iran, the crypto ecosystem was valued at more than $7.78 billion last year, growing faster than in previous years.
For citizens in these regions, the technology offers a lifeline. In high-inflation environments where local currencies lose value rapidly, digital assets provide a way to protect savings. A 1989 Bank of England note observed that capital flight is often a symptom of weak domestic policy rather than a cause of economic deterioration. In this context, cryptocurrency acts as a symptom of economic instability, allowing individuals to hedge against devaluation.
The technology is not without risks. A May 7th press release from the US Department of the Treasury noted that the agency is aggressively advancing operations like “Economic Fury” to disrupt billions in projected oil revenue and freeze nearly $500 million in regime-linked cryptocurrency. These efforts highlight the tension between the utility of decentralized rails and the desire of sovereign nations to maintain control over capital flows.
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As the global financial order becomes less universal and more regionalized, crypto is finding a home in sanctioned economies. Following the invasion of Ukraine, Russia was cut off from SWIFT, but exporters found a way to continue trade. In 2025, these transactions were responsible for roughly 1 trillion rubles ($11 billion). This illustrates how crypto has evolved from a speculative retail phenomenon into a state-enabled settlement layer. Rather than replacing banking infrastructure, it supplements systems that have lost access to conventional channels.
The Rise of Stablecoins
Centralized stablecoins have emerged as the primary bridge between the crypto world and the traditional financial system. Worth roughly $320 billion, these assets function as a synthetic digital dollar, backed by reserves like US Treasury bonds. This structure mitigates the volatility that has plagued other cryptocurrencies while still allowing for rapid cross-border settlement.
Unlike Bitcoin, which operates on a peer-to-peer network without trusted intermediaries, stablecoins rely on specific companies to maintain the peg. This centralization offers a middle ground between the inefficiency of legacy banking and the unpredictability of decentralized assets. The IMF notes that the market capitalization of the two largest stablecoins has tripled since 2023, with trading volume increasing by 90 percent.
This trend is reshaping monetary trends. In dollar-short economies, stablecoins function as a lifeline. In Argentina, businesses and households use USDT to protect savings from peso devaluation. In parts of Africa and Southeast Asia, freelancers receive payment in stablecoins to avoid correspondent banking delays. Rather than replacing the dollar, crypto extends it, allowing users to access dollar liquidity without relying on formal banking institutions.
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Central Banks Respond
The governmental response to cryptocurrency has evolved from dismissal to adaptation. Initially, central banks viewed digital assets as a threat to capital controls. Now, they are experimenting with their own digital currencies. As of July 2022, nearly 100 central bank digital currencies (CBDCs) were in research or development stages, with the eNaira in Nigeria and the sand dollar in the Bahamas already fully launched.
There are currently 41 CBDC projects being piloted globally, including Russia’s digital ruble, Brazil’s Drex, China’s e-CNY, and the Digital Euro. The defining mission behind these projects is often financial inclusion, particularly in cases like the Bahamas, where the goal is to serve unbanked populations across more than 30 inhabited islands.
The rapid development of tokenization projects is also moving from sandbox to pilot. The Bank of England is collaborating with private banks to explore digital ledger technology to facilitate faster, cheaper processes with fewer intermediaries. In America, five US banks are moving onto an Ethereum-based tokenized deposit system, and in Asia, Hong Kong and Singapore are processing real-time global treasury operations on blockchain.
Global shocks have accelerated this trend. In environments of high inflation and strict capital controls, Bitcoin becomes a tool of financial freedom. This utility has driven adoption in countries like Venezuela, where the number of Bitcoin users skyrocketed from 450 to 85,000 between 2014 and 2016.
