In recent years, cryptocurrencies have often been portrayed as instruments of economic freedom, financial innovation, and the democratization of finance. However, public debate often overlooks a fundamental point: money is not just another technology. Money is one of the primary instruments of economic governance, financial control, and public policy available to modern states.
For this reason, at the European Youth Think Tank (EYTT) we believe that the growing diffusion of cryptocurrencies represents a direct challenge to the monetary sovereignty of public institutions.
Money Is Not Just Another Commodity
Most discussions about cryptocurrencies treat money as if it were simply another good exchanged on a market. In reality, money performs much deeper functions: it serves as a medium of exchange, a store of value, and a unit of account. More importantly, it is one of the principal tools through which states govern their economies.
Through monetary policy, central banks influence inflation, investment, credit, and economic growth. Historically, control over money has always been closely linked to the very concept of sovereignty, and not merely in an economic sense. Throughout history, monetary power has often determined the balance of power between states, empires, and economic actors. Monetary sovereignty is therefore also a geopolitical matter.
It is no coincidence that, following the American War of Independence, one of the first decisions the newly independent United States made was the creation of a national currency. Nor is it a coincidence that all major economic powers have historically attributed strategic importance to controlling their own money. Notably, one of the most significant achievements of European integration has been the creation of the euro.
Bitcoin: More Speculative Asset Than Currency
The first cryptocurrencies, particularly Bitcoin, were created with the declared objective of providing an alternative to traditional monetary systems. Yet more than fifteen years after its creation, Bitcoin appears to function primarily as a speculative asset rather than as a genuine currency.
Its extreme price volatility makes it difficult to use as a stable means of payment or a reliable unit of account. What can be purchased with Bitcoin today may be worth significantly more — or significantly less — within a matter of weeks.
For this reason, its role as a medium of exchange remains limited, while its importance as an investment and speculative asset continues to grow.
Stablecoins and the Problem of Monetary Sovereignty
Even more significant is the rise of stablecoins, among which Tether (USDT) is perhaps the most prominent.
Unlike Bitcoin, stablecoins attempt to maintain a stable value through reserves typically linked to the U.S. dollar and, often, U.S. Treasury securities.
Many observers see these currencies as a simple technological innovation. But the issue is much deeper. Every time a stablecoin replaces a national currency in an economic transaction, it removes part of the monetary function traditionally performed by states and central banks. The value these cryptocurrencies acquire therefore coincides with the loss of value of a legal tender.
The rise of Tether illustrates how privately issued monetary instruments can generate enormous economic value. As stablecoins become more widely used in transactions, they increasingly perform functions traditionally associated with sovereign currencies, raising important questions about the future of monetary sovereignty.
If the value of money ultimately derives from its use, then stablecoins gain value precisely when they are used in place of sovereign currencies. Their expansion is therefore not neutral: it transfers monetary demand away from public currencies toward private monetary instruments.
In other words, a public function is gradually being transferred into private hands.
We therefore remain skeptical of the enthusiasm that some political leaders, including U.S. President Donald Trump, have expressed toward stablecoins. While the international use of instruments such as Tether may generate additional demand for U.S. Treasury securities and therefore provide certain advantages to the United States, it simultaneously undermines the monetary sovereignty of countries that already struggle with inflation and currency instability, particularly in parts of Latin America.
This dynamic is especially delicate because the value of stablecoins ultimately derives from the credibility of the traditional monetary system and the institutions supporting it. Yet the economic power generated by that trust becomes increasingly concentrated in the hands of private global actors.
For this reason, international institutions such as the International Monetary Fund and national central banking systems should pay closer attention to the growing role of privately issued currencies in global transactions and consider stronger mechanisms to protect monetary sovereignty.
Who Benefits From the Success of Cryptocurrencies?
It is often claimed that cryptocurrencies create new wealth. In reality, the issue is more complex.
Money does not generate wealth in the traditional sense. Rather, it facilitates exchange and coordinates economic activity. Its value depends largely on the degree to which it is accepted and used within an economic community.
When the use of a currency expands, demand for that currency increases, strengthening its position. From this perspective, the growth of cryptocurrencies can be understood as a process through which part of the demand for national currencies is transferred toward private monetary instruments.
This is not merely financial innovation. It is also a redistribution of monetary power.
From Keynes’ Bancor to Private Global Currencies
The idea of an international currency is not new.
In the 1940s, John Maynard Keynes proposed the creation of the Bancor, an international currency designed to facilitate trade among nations. The proposal was not intended to privatize money. On the contrary, it sought to establish an international monetary framework governed by public institutions.
Cryptocurrencies and stablecoins are producing something fundamentally different. They are creating global monetary instruments that are not directly accountable to democratically elected governments or international public institutions. This distinction is crucial.
Transparency, Regulation, and the Public Interest
Another important issue concerns transparency.
Cryptocurrencies and stablecoins are often presented as more efficient alternatives to traditional finance. Yet significant questions remain regarding governance, supervision, and accountability.
Furthermore, the ability to conduct transactions outside traditional banking systems creates challenges for efforts to combat tax evasion, money laundering, and other illicit activities. These problems certainly exist within conventional finance as well. However, the expansion of private monetary systems risks making regulatory oversight more difficult.
Historically, alternative currencies have often emerged in environments where states struggled to maintain effective monetary control or where economic actors sought to facilitate transactions outside official financial channels. In some cases, such instruments have been associated with tax evasion, money laundering, organized crime, illicit trade, and other activities designed to avoid regulatory oversight.
While cryptocurrencies are not inherently illegal and have many legitimate uses, their decentralized and borderless nature continues to raise concerns among regulators, law enforcement agencies, and central banks. In several cases, governments have eventually prohibited or restricted alternative currencies in order to protect monetary stability, combat illicit activities, and preserve sovereign authority.
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The Response of Central Banks
Criticism of cryptocurrencies should not be confused with opposition to innovation. On the contrary, we believe that the future of money will inevitably become increasingly digital.
For this reason, we welcome the development of Central Bank Digital Currencies (CBDCs), the digital euro, and other publicly issued digital payment systems.
China has already conducted extensive experiments with the digital yuan and has simultaneously adopted a highly restrictive approach toward privately issued cryptocurrencies. As the world’s second-largest economy, China appears to have recognized the risks that privately issued cryptocurrencies may pose to monetary sovereignty. Its restrictive approach may therefore reflect not only concerns about financial stability, but also a desire to preserve state control over monetary policy and payment systems.
Digitalization itself is not the problem. The problem arises when one of the fundamental functions of the state is progressively transferred to private actors.
A Question of Democratic Sovereignty
The central issue is not technology. The central issue is control over money.
At the European Youth Think Tank, we are not opposed to digital currencies. We support innovation, the modernization of payment systems, and the reduction of transaction costs. However, we believe that money should remain a public instrument, subject to democratic oversight and oriented toward the collective interest.
Throughout history, money has always been an economic, political, and geopolitical instrument. There is no reason to believe that this reality has disappeared in the twenty-first century.
The question we must ask is not whether the future will be digital, as it almost certainly will be. The real question is who will control the money of that future: public institutions accountable to citizens, or private actors whose primary responsibility is to shareholders and commercial interests.
In our view, the answer to this question will help determine not only the future of finance, but also the future of democratic sovereignty itself.
Editor’s Note: The opinions expressed here by the authors are their own, not those of Impakter.com
