MANILA, PHILIPPINES – Admiral Samuel Paparo, commander of United States Indo-Pacific Command, testified before Congress last week that bitcoin is a tool for “power projection.” Photo by Ezra Acayan/Getty Images)
Getty Images
Bitcoin represents different things to different people: Digital gold. A store of value. Hard money.
But to America’s top military commander in the Indo-Pacific? A tool of “power projection.”
At a Senate hearing last week, Admiral Samuel Paparo, Jr., the Commander of the United States Indo-Pacific Command, made the case that bitcoin is essential to protecting American national security. “Bitcoin is a reality,” said Admiral Paparo. “It is a valuable computer science tool as a power projection. And outside of the economic formulation of it, it has got really important computer science applications for cybersecurity.” At a House hearing the following day, Admiral Paparo revealed for the first time that the Pentagon is operating its own Bitcoin node to conduct “a number of operational tests to secure and protect networks using the Bitcoin protocol.”
How Iran, Taiwan, And Russia Are Leveraging Bitcoin As A Strategic Asset
The Admiral’s testimony comes on the heels of other countries using bitcoin to advance their own strategic interests: Iran is accepting bitcoin for transit tolls in the Strait of Hormuz. Taiwanese policymakers are considering bitcoin as a reserve asset to protect Taiwan’s wealth from confiscation in the event of a Chinese invasion. And Russia announced last week that it will accept bitcoin for foreign trade transactions starting in July. These developments mark a significant transition in bitcoin’s maturation as it moves from the phase of institutional adoption to nation-state adoption.
The pressure for countries to stake a claim in the fastest-growing monetary network in the world has even China acting against previously stated policies.
Unpacking China’s Bitcoin Strategy
China banned bitcoin and all other digital asset activity in 2021, citing concerns over environmental harm, consumer protection, and illicit finance. Yet its outward actions over the last year reveal that the CCP is monitoring bitcoin’s growing prominence as a geopolitical asset and remains keenly interested in growing its own bitcoin stack, which is the second largest of any country in the world.
In May 2025, the International Monetary Institute–China’s premier financial think tank which serves as a training ground for future central bankers–republished a report written by Matthew Ferranti, a former White House economist. Ferranti’s report makes the case for bitcoin as a reserve asset: “Bitcoin possesses some unique investment characteristics that could help central banks diversify against several risks, including those related to inflation, geopolitical tensions, capital controls, sovereign default, bank failures, and financial sanctions.” The IMI translated the article into Chinese and circulated it among CCP policymakers and the broader public with a note that said bitcoin’s rise as a reserve asset “deserves continued attention.”
The US And China Clash Over 127,000 Bitcoin
China’s top financial think tank sent a clear signal that it remains interested in bitcoin and its evolving use case as a strategic asset. But the strongest evidence of China’s bitcoin ambitions comes from an international legal battle with the United States.
In October 2025, the US Department of Justice seized 127,000 bitcoin, or about $15 billion, from Chen Zhi, a Chinese national and the chairman of Cambodia’s Prince Group. The DOJ charged Chen for running pig butchering schemes out of Southeast Asia that drained hundreds of American citizens of their life savings.
But before US authorities had a chance to detain Chen, he was extradited from Cambodia to China in January of this year after Chinese authorities drew up their own charges against the 38-year-old billionaire. Keep in mind that China has no extradition treaty with the United States. While China is holding Chen to account for some of his crimes, it also appears to be offering him safe harbor from American legal prosecution.
Amid this ongoing controversy, China has accused the United States of foul play. China’s National Computer Virus Emergency Response Center alleges that the US government stole the 127,000 bitcoin from Chen in a hack that took place as far back as 2020. According to the CCP, in 2020, US state actors hacked the bitcoin from LuBian, Chen’s bitcoin mining pool, and then announced they had “seized” the funds as part of a DOJ enforcement operation last fall.
A Battle For Bitcoin Supremacy
The subtext of this legal dispute is critical to understanding why China has invested so much political capital in this case: China has a history of seizing bitcoin from criminal actors within its own borders. If Chinese authorities can restore the seized bitcoin to Chen (who has also been charged for multiple high-level crimes by China), then the CCP could then claim Chen’s bitcoin as its own. With Chen’s bitcoin stack alone, China would blow past the United States as the largest nation-state holder of bitcoin, wielding approximately 321,000 bitcoin compared to the United States’ 198,000 bitcoin.
Properly understood, the legal controversy over Chen’s bitcoin holdings has little to do with the CCP protecting the rights of a known criminal and almost everything to do with the CCP trying to assert bitcoin supremacy over the United States.
The CCP may have banned its own people from trading and mining bitcoin. But the party’s actions make clear that it wants to hold bitcoin for itself. This “digital gold for me but not for thee” approach is in line with China’s past efforts to co-opt emerging technologies in an attempt to control its citizenry: China banned cryptocurrency just before launching its own central bank digital currency in 2021. And it built the infrastructure for internet access across the country before erecting the Great Firewall to keep Western platforms out.
Bitcoin: A Sword Or A Shield?
But given bitcoin’s decentralized nature, can China tame this technology like it has others?
Congressman William Timmons, who chairs the House Oversight Subcommittee on Military and Foreign Affairs, is skeptical. I sat down with Congressman Timmons last week and asked him what role he saw bitcoin playing in the United States’ strategic competition with China.
“[Bitcoin] is the beginning of the end of all authoritarian governments,” said the Congressman from South Carolina. “If you can’t control your citizenry as it relates to information and money, what do you have left?”
Congressman Timmons’ description of bitcoin as a national security tool in this exchange was notably distinct from Admiral Paparo’s description from earlier that day. Admiral Paparo expressed his belief that the bitcoin protocol can be leveraged as a defensive weapon to secure sensitive information. Congressman Timmons, meanwhile, described bitcoin more as an offensive weapon that can pierce capital controls in states that use money to control their citizens. Where Admiral Paparo described bitcoin as a shield, Congressman Timmons described it as a sword.
Whether bitcoin is a shield, a sword, or both will be made clear over the next decade as state competition over the world’s largest decentralized monetary network enters its next stage.