Rear Admiral Samuel Paparo, Jr., who leads U.S. forces across the Indo-Pacific, stated before a Senate committee that Bitcoin is a matter of national security. The Pentagon is running its own Bitcoin node and conducting operational tests to secure and protect networks using the Bitcoin protocol, Paparo confirmed during a House hearing — marking the military's first public acknowledgment.
This admission reflects a broader geopolitical shift. Iran is now accepting Bitcoin as payment for ships passing through the Strait of Hormuz. Taiwan is looking at Bitcoin as a reserve asset in case China targets its finances. Russia announced last week that it will accept Bitcoin for international trade starting in July. What was once a fringe digital currency is increasingly being treated as a state strategy tool.
China's position is the most complex. Beijing banned Bitcoin and all crypto activity in 2021, citing environmental damage, fraud risks, and illegal capital flows. Yet, China already holds the second-largest government Bitcoin stash in the world. In May 2025, the Chinese Institute of International Finance translated and shared a report from former White House economist Matthew Ferranti, claiming Bitcoin could help central banks hedge against inflation, sanctions, and financial crises, before passing it to Communist Party policy officials with a note stating that the rise of Bitcoin as a reserve asset "deserves continued attention."
The clearest sign of China's true intentions is a legal showdown with Washington over 127,000 Bitcoin, worth about $15 billion, seized by the U.S. Department of Justice from Chen Zhi, a Chinese billionaire accused of running fraud operations across Southeast Asia. Chinese officials brought Chen back to China in January, before U.S. authorities could detain him. Beijing then accused Washington of stealing the Bitcoin through a hack dating back to 2020. If China recovers Chen's assets, it would control about 321,000 Bitcoin, well ahead of the U.S. at 198,000.
Two U.S. senators are trying to cut China's edge in mining. In March, Senators Bill Cassidy from Louisiana and Cynthia Lummis from Wyoming introduced the "Mined in America" bill, addressing the 97% of Chinese equipment used in 38% of U.S. global Bitcoin mining activities. About 82% of the world’s specialized chip miner production is controlled by Bitmain. The bill prohibits certified miners from buying any new equipment made in China starting January 1, 2027, and mandates a complete transition away from this type of equipment by 2030. Certified miners can sell newly mined Bitcoin to the Treasury with a tax advantage.
Meanwhile, China is tightening its crypto rules. It is now illegal to promote cryptocurrency online on any platform, effective September 30.
