Forbes: Dollar Dominance at Risk of Being Overthrown Following the Launch of Bitcoin ETF, BTC Unstoppable

Bitcoin Spot ETF Approved for Listing: In addition to its potential positive impact on the price of Bitcoin, the approval of a Bitcoin Spot ETF in the United States will have a more profound effect – it will make it extremely difficult for the US government to ban digital assets, thus enabling Bitcoin to permanently drive the evolution of the fundamental workings of currency. This article, authored by Avik Roy, is compiled, organized, and written by Carbon Value.
(Previous Summary: Historic Moment: SEC Approves 11 Bitcoin Spot ETFs! Full Text of SEC Announcement and Summary of ETF-related Questions)
(Supplementary Background: Arthur Hayes Shocking Full Text: The Truth About Bitcoin Spot ETF Approval)
Table of Contents
Why is Creating More Currency Popular in the Short Term?
Can the US Government Ban Bitcoin?
ETF Makes Banning Bitcoin Extremely Difficult
The US SEC Knows What It Has Done
What Will Happen in a Crisis?
Support Financial Reform
The discussion about the approval of the long-awaited Bitcoin Spot ETF by the US Securities and Exchange Commission (SEC) revolves mainly around how the SEC’s actions will affect the price of Bitcoin. However, this is only a short-term story.
The most profound impact of ETFs driving the institutionalization of Bitcoin is that it will make it extremely difficult for the US to ban digital assets, thus enabling Bitcoin to permanently drive the evolution of the fundamental workings of currency.
Why is Creating More Currency Popular in the Short Term?
Fifteen years ago, when Satoshi Nakamoto published the Bitcoin whitepaper, he reiterated the long-standing concerns about the political economy of currency: governments have a strong political incentive to devalue their official currency in order to achieve spending greater than income.
Increasing government spending is politically popular, while increasing government revenue is not. Therefore, governments always try to increase spending without increasing taxes by borrowing, and when borrowing no longer works, they simply create more currency out of thin air.
In the short term, this is politically feasible because politicians can secure re-election by increasing spending on favored constituents. However, in the long term, an increase in the quantity of money leads to a decrease in the purchasing power of each unit of currency – simply put, inflation.
Satoshi Nakamoto and his compatriots are working to solve this problem by fixing the supply of Bitcoin at 21 million units. Unlike the supply of the US dollar, euro, yen, or renminbi, which increases over time, the total circulation of Bitcoin cannot be changed by politicians. In theory, this makes Bitcoin a more reliable long-term store of value compared to modern fiat currencies.
Further reading:
Bitget Celebrates “Bitcoin Whitepaper Day” 15th Anniversary, “Satoshi Nakamoto” Takes to the Streets to Give Away BTC
Can the US Government Ban Bitcoin?
If Bitcoin truly becomes a superior store of value compared to the US dollar, some people worry that the US government will ban this cryptocurrency. Ray Dalio, the founder of Bridgewater Associates, expressed this concern in an interview with Yahoo Finance’s Andy Serwer in 2021:
As early as the war years of the 1930s, Dalio observed that the government was concerned about the flight from the US dollar to gold, so:
Technically, the US government cannot ban Bitcoin, just like it cannot ban the internet. Bitcoin operates on a decentralized computer network that operates outside the jurisdiction of the US. In fact, despite China’s ban on Bitcoin mining in 2021, the Cambridge Alternative Finance Center estimates that in early 2022, about one-fifth of Bitcoin miners’ power consumption still occurred in China. Chinese cryptocurrency traders typically use virtual private networks and other tools to evade law enforcement officials.
But this does not mean that the US government has no influence. Theoretically, the US can prohibit the exchange of Bitcoin for US dollars on mainstream exchanges like Coinbase or Kraken. The US can prohibit mainstream banks from doing business with Bitcoin companies. The US can prevent companies like Microstrategy from holding Bitcoin on their balance sheets through authorization or accounting standards from the US Securities and Exchange Commission (SEC). The government might set up barriers to prevent retail businesses from accepting Bitcoin payments.
In other words, while the US cannot ban the operation of the Bitcoin network, theoretically, it can make it extremely difficult for mainstream Americans to use and buy Bitcoin, just like Franklin D. Roosevelt’s ban on private ownership of gold in 1933.
Further reading:
MicroStrategy Buys Another 16,130 Bitcoins, with a Floating Profit of $1.28 Billion! Issuing New Shares to Continue Buying BTC
ETF Makes Banning Bitcoin Extremely Difficult
This is where the new Bitcoin ETF comes into play. With a stroke of the US Securities and Exchange Commission (SEC), we can now see some of the largest and most powerful companies in the financial industry, including BlackRock, Fidelity, Invesco IVZ, and Franklin Templeton, holding billions of dollars worth of Bitcoin. ETFs allow a large number of investors who have never traded or privately held Bitcoin keys on cryptocurrency exchanges to immediately access Bitcoin.
This is important because it greatly expands the special interests that support the maintenance and strengthening of Bitcoin’s role in the US financial market. If you are a congressman who does not like Bitcoin or an ambitious regulator who wants to impose some of the restrictive policies I described above, you will not only hear the opinions of Bitcoin holders, but also the opinions of major financial participants in Washington who have considerable influence.
Based on this, policymakers will find it difficult to actively restrict the use of Bitcoin. As someone who frequently deals with Washington, I can confirm the traditional view that special interest groups play a very important role in the policy-making process. Lobbyists are particularly adept at opposing new policies that would adversely affect their clients’ interests.
Currently, the amount of Bitcoin held in ETFs exceeds $25 billion, of which approximately $1 billion was generated within two weeks after the SEC gave the green light to new ETFs. Even for financial giants like BlackRock, this is a significant amount of money.
The US SEC Knows What It Has Done
The US Securities and Exchange Commission is aware of all this, which is why the struggle to approve Bitcoin ETFs has been so fierce. According to relevant laws of the SEC, its responsibility is not to determine whether Bitcoin is a good investment, but rather to let investors and the market decide.
However, in the past 10 years, the SEC has consistently resisted allowing investors to access Bitcoin through mainstream, regulated instruments. This is precisely because the SEC knows that its approval can greatly increase investors’ interest in digital assets.
The SEC only approved the Bitcoin Spot ETF under the pressure of a unanimous opinion written by Neomi Rao, a judge on the United States Court of Appeals for the District of Columbia Circuit, which described the SEC’s resistance to Bitcoin ETFs as “willful and arbitrary” because the agency had already approved similar products for Bitcoin futures and other commodities.
SEC Chairman Gary Gensler has repeatedly stated that Rao’s opinion forced him to take action. Based on these circumstances, Gensler wrote in a statement, “I believe the most sustainable path forward is to approve the listing,” even though he criticized Bitcoin as “primarily a speculative and volatile asset” that is also used for illegal activities, including ransomware, money laundering, evading sanctions, and financing terrorism.
Two other Democratic-appointed members of the SEC, Caroline Crenshaw and Jaime Lizárraga, voted against the listing of the ETF in January.
What Will Happen in a Crisis?
I have explained why the approval of the Bitcoin ETF makes it difficult for the government to ban the Bitcoin market in the US, at least in the foreseeable future. But what if the Bitcoin bulls are correct and Bitcoin rises to a level where it competes with the US dollar as a store of value? Will the US intervene and suppress Bitcoin?
They can try. But by then, it will be too late. Take Argentina as an example. The Argentine government prohibits its citizens from converting more than $200 worth of Argentine pesos into US dollars each year. Despite this restriction, the Central Bank of Argentina estimates that Argentines hold over $200 billion in cash, which is equivalent to 10% of the total circulation of US dollars.
Currently, US federal debt is about $34 trillion, which essentially means that there is approximately $34 trillion of government bonds in circulation. The liquidity of Bitcoin, that is, its attractiveness to large institutions as a store of value, may begin to compete with US government bonds at approximately one-fifth of its value (such as $7 trillion, which is approximately 9 times the current market capitalization of Bitcoin). As federal debt continues to increase, the threshold for liquidity competition will also increase.
However, if we follow the logic of the reflexivity argument, Bitcoin’s market capitalization can only reach $7 trillion when it is more widely recognized as a store of value than it is now. By then, the US crackdown on Bitcoin is likely to backfire, just like Argentina’s current capital controls, because the crackdown will send a signal to the world market that the US no longer believes in the inherent superiority of the US dollar.
Support Financial Reform
In the best case, the US will address its fiscal problems, most notably excessive spending on healthcare, and put federal debt on a sustainable path. But before that happens, Americans can buy Bitcoin as insurance against the devaluation of the US dollar due to soaring federal debt. The US Securities and Exchange Commission has just ensured the long-term existence of this insurance.


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