Crypto assets are emerging as instruments of economic statecraft, reshaping national sovereignty and regional influence in the digital age. They have transcended their origins from hobbyist or techno-geek into financial tools influencing global geopolitics. As of 2025, crypto assets and more importantly stablecoins are altering financial systems, accelerating innovation, and creating new pathways for international cooperation.
One of the most remarkable geopolitical impacts of crypto assets lies in their ability to empower nations for cross border transactions. Across the globe, this special characteristic has helped in a plethora of efforts starting from humanitarian assistance in Ukraine and Afghanistan to helping citizens maintain and preserve their wealth in jurisdictions with weaker economies to something as extreme as helping countries overcome sanction restrictions. Russia has deepened its reliance on digital assets to mitigate the impact of Western sanctions, facilitating commodity trade with friendly states through peer-to-peer asset transfers. Iran’s oil exports to Asia increasingly settle via stable assets denominated in non-dollar baskets, demonstrating how sanctioned economies deploy crypto to preserve export revenues. The USA for sure has transitioned from restriction to facilitation mode while the UK is rolling out multiple consultations to ensure they are on track to regulate this industry by 2026. The EU has implemented MICA and is in the early phase of understanding its impact.
The Indo Pacific region also presents a microcosm of this transformation, with each country pursuing divergent strategies to harness or monitor digital assets, and some going to the extreme to prohibit them too. On one hand, we have established global financial centres such as Singapore and Hong Kong which have legitimised cryptos in their regulatory environment by successive changes to their laws while on the other hand technologically advanced economies such as Japan, Taiwan and South Korea have tilted towards the self-regulation route. Indonesia, Philippines, Vietnam have their own models of engagement.
In our immediate neighbourhood also, we are seeing the entire spectrum of engagement on display. Bhutan has been an early adopter and has been using Bitcoin mining for its strategic economic reasons. Pakistan has suddenly shifted its stance from prohibition to establishing a new regulator for crypto-assests. Bangladesh, Myanmar, Nepal, and Sri Lanka maintain prohibitionist stances under central bank directives and foreign exchange laws. China presents a unique case: while all crypto-asset trading and ownership are strictly banned on the mainland, the government is actively exploring a yuan-backed stablecoin. At the same time, various digital asset activities are permitted and even incentivized through Hong Kong’s more progressive regulatory framework, creating distinct and sometimes contrasting approaches within the broader Chinese jurisdiction.
Amidst all these developments, India is maintaining a stance of monitoring VASPs through specific AML/CFT guidelines along with CERT-in directions and ASCI self-regulatory marketing guidelines. India’s 2023 G20 presidency solidified its role as a thought leader in digital-asset policy. However the current stance lacks granularity and coherence . This regulatory gap risks driving domestic innovators and international firms to relocate to jurisdictions offering greater certainty, while demand from prohibitionist neighbors may bypass Indian platforms entirely.
Without a comprehensive policy roadmap, India risks becoming a second-order player in a first-order transformation. If we do not define our own sovereign digital asset infrastructure, others will define the terms of our participation. If we do not build appropriate policy safeguards, we will remain vulnerable to sanction-evasion routes, terror financing, and monetary subversion. Moreover, we may lose the initiative to develop local champions that could harness crypto assets to drive economic inclusion, regional integration, and diplomatic influence, securing India’s place as a leader in the rapidly evolving digital economy. Failing to act decisively now would cede strategic ground to others shaping the future of politics and sovereignty.