When Crypto Becomes Diplomatic Currency

I recently read the piece "Tales from the Crypto: How Pakistan is worming its way back into US favour" and found myself reflecting on how technology — and in particular novel financial rails like crypto — are rewriting the rules of statecraft. The article’s reporting, framed against an unfolding diplomatic choreography, reminded me that geopolitics no longer lives only in embassies and summit halls; it increasingly flows through wallets, ledgers and the marketplaces of finance (Bloomberg Middle East).

Small rails, big leverage

What struck me most was a simple, unsettling idea: small, nimble financial channels can produce outsized political effects. Cryptocurrencies, stablecoins and cross-border fintech create new paths for remittances, influence, and even informal patronage. When a nation understands how value flows outside traditional banking and sanctions regimes, it gains options — some of them constructive, others ambiguous.

I don’t mean to moralize about the technology itself: crypto is a tool. But tools acquire geopolitical personalities depending on who wields them and to what ends. The same ledger that helps a small business accept diaspora payments can also become a vector for fast-moving political capital — donations, incentives, or simply the appearance of engagement that shifts a foreign government’s posture.

Patterns I’ve watched before

This is not entirely new to me. Years ago I wrote about how digital wallets and interoperability would reshape finance and behaviour — how accounts, instruments and algorithms would start to orchestrate money with a sophistication we had not seen before (A Matter of Time). That post was about domestic convenience; today’s reality makes it clear that the same architectures can be repurposed for diplomacy and influence.

Likewise, I’ve commented on how AI and algorithmic decision-making enter domains once thought purely human — from financial markets to editorial choices. Those reflections feel relevant now because geopolitical actors are borrowing the same playbook: combine new technology with old incentives and you get unexpected leverage (Robots picking stocks; Largescale AI Infrastructure).

The core idea I want to highlight — and it’s striking to me how prescient it feels in this context — is that I raised these themes years ago. I urged readers to notice how payments and algorithms would change markets and, in time, politics. Seeing those threads reappear in the way a country might use crypto to reopen diplomatic channels is validating; it also sharpens my sense of urgency about thinking through the second- and third-order effects.

Diplomacy in the age of ledgers

Some concrete observations that the Bloomberg piece nudged me toward:

• States can use crypto to cultivate soft-power networks quickly. Small funding flows to influencers, think tanks, or diaspora groups produce outsized visibility, which can translate into policy attention.
• Non-traditional financial instruments complicate conventional leverage. Sanctions and banking pressure remain powerful, but alternative rails create friction for enforcement — and incentives for creative workarounds.
• The speed and opacity of on-chain flows make narrative-building easier and accountability harder. A handful of transfers can create stories that shape public perceptions faster than traditional diplomacy can respond.

None of this implies inevitability. Technology amplifies choices; it does not replace them. The question is who will set the norms and controls around these instruments — and whether democratic states can adapt their tools of influence and oversight without throttling innovation.

What this means for democracies and institutions

If states can weaponize novelty, democracies must do two things simultaneously:

• Upgrade their tools of transparency and resilience (better tracing, stronger international cooperation on financial oversight, and public literacy about digital finance).
• Use the same agility defensively and proactively: building positive engagement channels that are fast, accountable, and credible. If a small transfer can tilt a narrative, a well-designed, transparent outreach program can do the same for democratic values.

My prior writings have argued for sensible public–private partnerships in tech — whether it was on AI infrastructure or interoperable payment systems. Those partnerships matter here too. Institutions that understand how to marry capability with ethics will be best placed to manage these new vectors of influence (Fuel India’s AI mission; Largescale AI Infrastructure).

A personal takeaway

Reading the Bloomberg piece felt like watching a long conversation converge. The technological currents I wrote about — from mobile wallets to algo-driven markets — have flowed into geopolitics in ways I anticipated, but the political creativity on display still surprises me.

I remain convinced that the right response is not banning innovation, but rather designing institutions that can channel innovation toward openness, accountability and shared prosperity. If crypto can be a bridge, let it be a bridge built on transparency and strong norms, not one that shortcuts responsibility.

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Regards,
Hemen Parekh