Following its botched exit from Afghanistan, the U.S. has launched a new, all-out offensive on the Taliban’s finances, halting cash shipments destined for Kabul, influencing the World Bank and the IMF to cut off financial aid, and blocking access to Afghan government accounts — which conveniently reside at the Federal Reserve.
For the world’s pre-eminent superpower, repressing the Taliban’s bankbook is just another day at the office. Over the last twenty years since-9/11, the U.S Treasury Department has grown into the largest, most devastating monetary armament, exercising its various offices, with alphabet-soup style names, to disrupt, dismantle, even destroy enemy financial networks.
From quashing bad banks that fuelled North Korea’s “Office 39” to cutting off Hezbollah-backed Iranian institutions from the global financial system, the Treasury’s “Eye of Sauron” has been a highly effective tool for the U.S. empire.
Now, though, it faces a new kind of adversary: cryptocurrencies, in particular Bitcoin. As the Biden administration continues to limit the Taliban’s financial ability to use U.S. Dollars in global trade, cryptocurrencies such as Bitcoin have been touted as a potential workaround.
But Bitcoin’s supposed benefits aren’t as sound you might think. It’s only anonymous or “censorship resilient”, for instance, if you’re not Ross Ulbricht, a Colonial Pipeline hacker, or anyone else the U.S. security agencies pursue with a vengeance.
What’s more, as a rogue state, partial anonymity is soon outweighed by Bitcoin’s instability as a currency. Essentially, you take on the unique risk of holding your reserves in a global currency free from regulation and oversight, which means any other entity across the globe can not only influence but monopolise Bitcoin. In turn, this would give said entity undue control over the cryptocurrency’s price.
While the dominant narrative portrays that Bitcoin has become the go-to hedge against inflation, causing the masses to pile in and drive up its price, we’ve seen rising speculation from individuals outside the mainstream crypto bubble, who claim only a few crypto insiders have been fuelling Bitcoin’s epic rally.
Ultimately, we don’t know whether Bitcoin’s price is going to drop or keep rising. Both sides remain adamant they are right, but nobody really knows who or what has been fuelling Bitcoin’s rapid rise. The crypto bear’s hypothesis — that crypto insiders have been fuelling the latest boom — is feasible, and if true, will prove disastrous for anyone who has adopted Bitcoin to skirt the legacy financial system.
It’s almost inconceivable to imagine the impact of a scenario in which the Taliban use Bitcoin to bypass U.S. sanctions and watch their net worth plunge more than 80%. Then again, if Bitcoin does indeed ‘go to the moon’, and the Taliban takes a punt while other powers keep dismissing it as fool’s gold, we could see them become the next Saudi Arabia. Only this time, backed by a fluorescent-orange digital coin.
Greg Barker is an independent journalist and quant, who also writes under the name Concoda. You can find him on Substack and Twitter at @concodanomics.