A familiar story about cryptocurrencies is that they emerged under the promise of financial emancipation. Crypto-assets and blockchain technologies were imagined as tools to decentralize state power, bypass “corrupt institutions,” and democratize economic life. Nevertheless, a very different story has unfolded. Crypto-assets have become a speculative and criminogenic domain of contemporary finance, where volatility, opacity, and regulatory arbitrage enable fraud, market manipulation, illicit financial flows, and large-scale wealth extraction. Even so, proponents insist that crypto-assets create a space for contesting state power.

Here lies a central contradiction: the cryptoeconomy is marketed as a stateless and deregulated, yet it remains deeply dependent on state infrastructure, legal frameworks, emergency interventions, and public rescue capacities.

Here lies a central contradiction: the cryptoeconomy is marketed as a stateless and deregulated, yet it remains deeply dependent on state infrastructure, legal frameworks, emergency interventions, and public rescue capacities. This dependence becomes clearer when examining how specific states and their governments have shaped crypto-assets’ adoption and embedded digital assets into national economic strategies. From Argentina and El Salvador to Puerto Rico (PR), Venezuela, and the United States (US), political leaders have embraced crypto-assets to reinscribe state power, carve out new domains of economic activity, and deepen structures of dispossession. As scholars observe, crypto-assets have played a role in democratic backsliding across Latin America, yet crypto-adoption is not a story of autocratic outliers but a defining feature of contemporary states and financialized digital capital.

Across different jurisdictions, state crypto-adoption is routinely tied to emergency powers, executive overreach, regulatory arbitrage, and other forms of state-initiated and state-facilitated harm. In Latin America and the broader Global South, these initiatives layer onto long histories of colonialism, austerity, debt, and value extraction, intensifying existing inequalities rather than alleviating them.

At its core, the cryptoeconomy revolves around converting fiat currency into digital assets under the speculative promise of future appreciation.

At its core, the cryptoeconomy revolves around converting fiat currency into digital assets under the speculative promise of future appreciation. Crypto-assets, digital representations of value stored through cryptographically secured, permissionless blockchains, include Bitcoin, Ethereum, privacy coins such as Monero, stablecoins like Tether, and thousands of altcoins with varying governance structures. Behind the apparent simplicity of these systems lies a highly opaque network of leverage trading, synthetic tokens, and derivatives that amplify systemic risk. State adoption magnifies these dangers by integrating digital assets into national financial systems and shifting volatility downward onto already vulnerable populations.

The rise of decentralized finance (DeFi) after 2020 deepened this terrain. DeFi promises to replace banks with code, enabling lending, borrowing, and derivatives trading without intermediaries or identity checks. However, opacity, algorithmic complexity, and the absence of consumer protection create ideal conditions for fraud, insider manipulation, and systemic instability. Anti-money-laundering norms, Know-Your-Clients requirements, and prudential supervision are routinely bypassed in the name of innovation. In many cases, states actively condone, and at times even encourage, the way crypto and fintech companies bypass or disregard this and other essential financial regulations.

Crypto-assets thus rest on uneven geographies of energy, infrastructure, and state regulation. The collapse of firms such as FTX and Celsius exposed the legal fictions underwriting the industry. FTX, headquartered in the Bahamas, and its founder, Sam Bankman-Fried, funneled deposits into Alameda Research for risky trades and political donations. Its collapse triggered global contagion and required extensive intervention by US regulators, effectively resulting in a taxpayer-supported backstop for a sector that claims to be beyond the state.

…the convergence of state power and digital finance increasingly blurs the line between governance and grift, legality and looting.

In this piece, I examine how state-led crypto-assets adoption across Latin America, the Caribbean, and the US generates new forms of financial harm. By tracing these disparate experiences and showing how governments deploy crypto through executive authority, emergency powers, and regulatory exemptions, I argue that the convergence of state power and digital finance increasingly blurs the line between governance and grift, legality and looting. Alas, deepening inequality and heightening the everyday risks borne by ordinary people.

Seizing the State: Charter Cities, Crypto-SEZs, and Crypto Islands

A significant manifestation of state-led crypto-adoption is the development of special economic zones (SEZs), legal and tax arrangements designed to attract crypto-investors. Over the past 15 years, experimental city projects and SEZs have incorporated crypto into their designs, often funded by venture capital, envisioning new sovereignties anchored in digital assets.

These benefits apply only to investors who relocated, turning the archipelago into a settler-style crypto-enclave.

For instance, Puerto Rico’s (Tax Incentive Code (Act 60 of 2019) has become a central legal mechanism for attracting crypto-investors to the archipelago. Because bona fide residents of PR (any US citizen who lives in the archipelago for at least 182 days per year) are exempt from US federal income tax, Act 60 allows wealthy US individuals to legally avoid paying local, state, and federal tax obligations. The law consolidates earlier incentives into a framework that provides a 4% corporate tax rate, 0% tax on dividends and capital gains, and broad exemptions on property, municipal, and export service income. These benefits apply only to investors who relocated, turning the archipelago into a settler-style crypto-enclave. Additionally, this residency requirement has fueled the arrival of crypto-entrepreneurs, driving land grabs and real-estate speculation. Grounded in PR’s colonial legal status, Act 60 functions as a state-designed crypto-haven that reinforces colonial subordination and deepens inequality.

Similarly, El Salvador’s Bitcoin City fits within a broader constellation that includes Próspera in Honduras, Itana in Nigeria, Metropolis in Palau, and the East Solano “California Forever” plan. These projects treat land in the Global South as a blank slate for new urban formations, disregarding existing communities and ecologies. El Salvador’s proposed Bitcoin City, built at the base of a volcano and funded with crypto-backed bonds, epitomizes this fantasy of converting territory into collateral. Furthermore, El Salvador and Venezuela have sought to attract crypto-mining as part of broader digital economy strategies. President Nayib Bukele’s government marketed geothermal Bitcoin mining at the Berlín plant as ecological innovation, a narrative that obscures the environmental and social costs of dedicating public resources to speculative finance.

Próspera is especially illustrative of how states create the very conditions for their own political and economic fragmentation. Established on Honduras’ Roatán Island under the Zones for Employment and Economic Development (ZEDE) framework, Próspera embraced its own legal and tax system and integrated Bitcoin into its core monetary design. By delegating regulatory authority, fiscal autonomy, and dispute-resolution mechanisms to a privately governed enclave, the Honduran state effectively enabled the emergence of a quasi-sovereign jurisdiction within its territory. Following mobilization by local communities, especially the Garífuna, Honduras’ Supreme Court declared ZEDEs unconstitutional and repealed the framework in 2022. Yet Próspera’s investors filed an $11 billion investor–state arbitration claim under the Central American Free Trade Agreement, using investment law to challenge democratic decision-making and environmental protections, demonstrating how these enclaves can leverage international legal regimes to contest the authority of the very state that created them.

Alongside these dynamics, Caribbean offshore financial centers (OFCs) have evolved to accommodate crypto-assets as part of their financial services. Crypto-assets have become embedded in OFCs such as Bermuda, the British Virgin Islands (BVI), the Cayman Islands, and PR, jurisdictions marked by limited sovereignty, colonial legacies, and imperial legal orders. In recent years, these centers have established crypto-specific regulatory sandboxes, pilot programs, and licensing regimes that function as de facto crypto-zones: enclaves where digital-asset companies can experiment with new products under relaxed oversight. These measures mirror earlier offshore strategies that paired legal arbitrage with secrecy to attract mobile capital. By embedding crypto-assets within long-standing secrecy frameworks, asset protection, shell-company domiciliation, and tax evasion, OFCs have been able to diversify, reanimate, and expand their financial activities, aligning themselves as early adopters of emerging regimes of crypto-governance.

These enclaves function as laboratories for digital finance while entrenching asymmetries of power and accountability.

Hence, from Caribbean OFCs to El Salvador and Honduras to projects like the Catawba Digital Economic Zone in the US, states have created crypto-zones or spaces of exception where standard rules are suspended in the name of innovation. These enclaves function as laboratories for digital finance while entrenching asymmetries of power and accountability. Their experiments inform national policies in states such as El Salvador and Argentina and resonate with the regulatory agenda emerging under Donald Trump in the US.

Latin American Neoliberal Crypto-Utopia, Authoritarian Reality

El Salvador, Argentina, and Venezuela illustrate how Latin American states have become central to the design of neoliberal crypto-utopias that quickly devolve into authoritarian extractive realities.

Under Bukele’s government, El Salvador offers the clearest example of state-driven crypto adoption. Framed as a leap into a digital future in 2021, El Salvador became the first country to declare Bitcoin legal. Unveiled in English at a Miami Bitcoin conference, the Bitcoin Law served less to benefit Salvadorans than to project techno-sovereignty and attract Global North crypto-investors. Bukele sought to rebrand the country as a crypto-hub modeled on OFC’s regulations. As with the country’s 2001 dollarization, the law followed a familiar neoliberal script: technocratic, top-down, and framed as modernization. Its central promise to bank the unbanked quickly collapsed as Bitcoin lost more than 50% of its value. For Salvadorans living paycheck to paycheck or dependent on remittances, this volatility translated into direct losses in subsistence income. Nearly 70% of the population opposed the law; the primary beneficiaries were foreign investors and domestic elites poised to profit from price swings.

Central to this experiment was the state-built Chivo Wallet. Citizens received $30 to incentivize adoption, yet usage remained minimal: by mid-2022, over 60% of registered users had never made a transaction, and by 2025, 92% had not used Bitcoin in the prior year. Technical failures, fraud allegations, and deep distrust eroded public confidence. Despite a brief moment of celebration when Bitcoin surpassed $100,000 in December 2024, Bukele quietly dismantled key parts of the policy in early 2025 to secure a $1.4 billion International Monetary Fund (IMF) loan. Businesses were no longer required to accept Bitcoin, the Chivo Wallet was privatized, and taxes reverted to fiat currency.

Moody’s estimated the experiment cost roughly $375 million, attesting to a deliberate state involvement in speculative harm. Bukele’s broader rule, characterized by states of exception, mass incarceration, and the dismantling of judicial independence, provided the political and legal conditions in which crypto-utopian rhetoric became a tool for consolidating power. Crypto-libertarian fantasies of decentralization and freedom were enforced by highly centralized, coercive state authority.

Argentina’s crypto boom is often framed as a grassroots response to inflation and financial instability.

The Latin American story of state crypto-adoption does not end with El Salvador, but it can be found in different contexts. Argentina’s crypto boom is often framed as a grassroots response to inflation and financial instability. The country now ranks first in Latin America and fifteenth globally in crypto holdings, with an estimated $91 billion in digital assets. President Javier Milei embraced this landscape, portraying himself as a radical libertarian eager to dismantle the state. Yet his administration became embroiled in the $LIBRA scandal in February 2025; a speculative token he personally promoted on X. Marketed as support for small businesses, $LIBRA soared from zero to nearly $5 before collapsing below $1 within hours. Analysts identified it as a classic rug pull: over $107 million in insider profits extracted, 86% of traders incurring losses, and total damages exceeding $250 million. The problem was not state absence but state capture. Milei’s deregulation of finance shielded speculative elites from accountability, reframing financial harm as the inevitable cost of “innovation.”

Venezuela offers a related logic under conditions shaped by US economic sanctions. In 2018, the Nicolas Maduro government created the Petro, a state-backed cryptocurrency pegged to oil reserves and presented as a tool to bypass US sanctions, obtain foreign currency, and stabilize public finances. In practice, the Petro was opaque, adopted minimally, and riddled with corruption allegations. Yet it served the regime rhetorically, as a symbol of technological sovereignty and resistance to US financial pressure, even as Venezuelans endured hyperinflation, food shortages, and mass displacement. Here too, crypto-assets operate not as a means of emancipation from central banking but as a state mechanism for managing crisis by shifting risks onto ordinary people.

Across Argentina, El Salvador, and Venezuela, state crypto-adoption fuses neoliberal governance with authoritarian power. Whether framed as modernization, sovereignty, or innovation, these initiatives intensify precarity and concentrate benefits among political insiders and speculative elites.

Across Argentina, El Salvador, and Venezuela, state crypto-adoption fuses neoliberal governance with authoritarian power. Whether framed as modernization, sovereignty, or innovation, these initiatives intensify precarity and concentrate benefits among political insiders and speculative elites. Crypto-assets become a state-enabled instrument of extraction, in which contemporary states deploy crypto to consolidate authority, bypass institutional constraints, and channel public resources into speculative financial circuits.

The United States under Trump: Presidential Powers, Corruption, and Financial Speculation

Argentina, El Salvador, and Venezuela exemplify emergent state crypto-adoption in neoliberal-authoritarian contexts; the Trump administration shows how a powerful state can mobilize executive authority to institutionalize speculative digital finance.

Since returning to office, Trump has issued a series of executive orders that have radically reshaped federal crypto policy.

Since returning to office, Trump has issued a series of executive orders that have radically reshaped federal crypto policy. Executive Order 14178, signed on January 23, 2025, prohibited the establishment of a US central bank digital currency (CBDC), framing it as a threat to economic liberty and privacy. Instead, it guaranteed unrestricted access to blockchain networks, including the right to mine, validate, transact, and self-custody digital assets. Executive Order 14233 created the Strategic Bitcoin Reserve and the US Digital Asset Stockpile, effectively positioning Bitcoin as “digital gold.” Funded partly with forfeited property, this move blurred the line between the public treasury and a high-risk, speculative portfolio, making macroeconomic stability dependent on one of the world’s most volatile markets.

Regulatory agencies were similarly reoriented. The Securities and Exchange Commission launched a Crypto Task Force in January 2025, but under Trump, it shifted from enforcement to industry partnerships. At the Department of Justice, the National Cryptocurrency Enforcement Team, created in 2022 to prosecute crypto-related fraud, was disbanded in April 2025. Deputy Attorney General Todd Blanche announced that the DOJ would focus only on terrorism, drug trafficking, and organized crime, effectively leaving most white-collar crypto abuses unregulated.

The administration’s posture toward corporate offenders further demonstrates the fusion of state authority and speculative finance.

The administration’s posture toward corporate offenders further demonstrates the fusion of state authority and speculative finance. On March 28, 2025, Trump issued a presidential pardon to HDR Global Trading, the parent company of BitMEX, and its co-founders Arthur Hayes, Benjamin Delo, and Samuel Reed. HDR had pleaded guilty to Bank Secrecy Act violations and money laundering and faced a $100 million fine and probation. It was reportedly the first time in US history that a corporate entity convicted of financial crimes received a presidential pardon. Similarly, Trump pardoned Changpeng Zhao, founder of Binance, on October 23, 2025. Zhao pleaded guilty in April 2024 to violating US money-laundering laws; Binance, registered in the Cayman Islands, also pleaded guilty and agreed to a $4.3 billion fine. The pardon coincided with deepening financial ties between Trump family ventures, including World Liberty Financial, and major crypto firms.

The Trump family also became heavily involved in the memecoin economy. The $TRUMP token, launched with explicit family branding, soared to a market capitalization of $14.5 billion before collapsing, leaving roughly 800,000 retail investors, many of them Trump supporters, with an estimated $2 billion in losses. Large holders extracted more than $10 million each, and creators reportedly collected over $100 million in trading fees. Shortly afterward, Melania Trump launched $MELANIA, which followed the same pattern of concentrated holdings, rapid inflation, and collapse.

This is far more than a conflict of interest. It represents the fusion of executive power, political branding, and speculative finance, in which the state becomes an active participant, shaping, enabling, and profiting from the very markets it is tasked with regulating.

Though framed as risk-reducing, critics such as Public Citizen warn that it allows tech and crypto firms to assume quasi-banking functions while escaping oversight under the Bank Holding Company Act.

The regulatory framework surrounding stablecoins completes this picture. The GENIUS Act, passed in July 2025, establishes licensing, transparency, and reserve requirements for “covered stablecoins.” Though framed as risk-reducing, critics such as Public Citizen warn that it allows tech and crypto firms to assume quasi-banking functions while escaping oversight under the Bank Holding Company Act. Reports that Trump family members are negotiating a stake in Binance US only underscore concerns that the new framework advances private interests under the veneer of responsible innovation.

Taken together, Trump’s crypto agenda demonstrates how the state is mobilized through executive authority, regulatory rollback, and political branding to institutionalize speculative finance and shield elites from accountability. Crypto-assets have become deeply embedded in authoritarian governance that redirects public resources, legalizes extraction, and normalizes speculative digital capitalism.

Conclusion

State crypto-adoption is a deliberate strategy pursued by administrations that fuse neoliberalism and authoritarian practices. Across the cases discussed in this piece, the adoption of crypto-assets bypasses democratic deliberation and institutional checks. They are implemented through executive orders, emergency powers, regulatory carve-outs, and high-volume propaganda on social media platforms. Their social costs, household losses, heightened volatility, environmental degradation, and deepened inequality are dispersed across populations already strained by austerity, debt, and economic instability. Their benefits accrue to a narrow segment of investors, political insiders, and corporate actors embedded in crypto-financial circuits.

Latin America and the Caribbean have long been treated as a laboratory for financial engineering, from structural adjustment and debt restructuring to free trade agreements and offshore finance governance. The current wave of crypto-assets adoption is a continuation of this history, now articulated through fintech, digital assets, and blockchain. Under the guise of inclusion and innovation, crypto-adoption in the region deepens the extractivist process. Crypto-assets are not simply speculative instruments; they have become the State’s tools of economic warfare, vehicles for capital flight, and instruments for reconfiguring sovereignty itself.

If crypto-assets began as a challenge to financial power, they now risk entrenching it in new, less visible ways. The task ahead is not only to regulate this sector more effectively, but to confront the underlying political economy that makes crypto so attractive to authoritarian leaders and speculative elites. That means resisting techno-solutions or technofixes to political-economic issues such as inequality and risk. This means building transnational alliances capable of withstanding the digital retooling of colonial and capitalist domination.