Bitcoin Diplomacy: The Role of Cryptocurrency in International Relations
The recent agreement between Pakistan and El Salvador on using cryptocurrency showcases how emerging economies can leverage digital currencies to navigate traditional multilateral financial frameworks. This deal, which some are calling “Biplomacy,” signifies a departure from typical diplomatic relations and opens up a new realm of international cooperation centered on Bitcoin advocacy.
President Nayib Bukele of El Salvador and Pakistan’s special assistant on cryptocurrency and blockchain, Bilal Bin Saqib, met to create formal channels for information sharing and collaboration related to Bitcoin initiatives. El Salvador’s successful establishment of a Bitcoin Office provides a blueprint for Pakistan’s adoption of digital assets and the implementation of state-level cryptocurrency strategies. The partnership between El Salvador’s Bitcoin Office and the Pakistan Crypto Council sets the stage for joint efforts on public sector adoption, financial inclusion through blockchain technology, and policy development tailored to emerging markets.
Pakistan’s shift towards cryptocurrency represents a significant policy reversal, considering the country’s prior stance on digital currencies in 2018. The establishment of the virtual Assets Regulatory Authority and the Pakistan Crypto Council underscores Pakistan’s commitment to crypto adoption. Globally, Pakistan ranks high in terms of cryptocurrency usage, with a substantial number of citizens holding digital assets valued in the billions.
Pakistan’s engagement with external Bitcoin advocates like Michael Saylor from MicroStrategy signals the country’s seriousness in exploring how digital currencies can enhance financial resilience. However, involving private sector partners in sovereign cryptocurrency initiatives raises concerns about profit-driven motivations potentially compromising effective governance and development priorities.
The strategic incorporation of Bitcoin strategies into Pakistan’s plans coincides with geopolitical considerations, as demonstrated by the partnership between the Pakistan Crypto Council and World Liberty Financial, linked to the Trump family. This collaboration hints at possible maneuvers to align Pakistan’s interests with key global players, showcasing the intricate networks shaping cryptocurrency adoption efforts.
The collaboration between Pakistan and El Salvador comes at a crucial moment as both countries navigate IMF programs while pursuing cryptocurrency strategies divergent from IMF guidelines. Despite IMF restrictions on digital asset purchases, Pakistan has allocated resources to Bitcoin mining and reserves, whereas El Salvador faces pressure regarding its expanding Bitcoin reserves funded by public money.
By forging a path of defiance against traditional financial regulations through their “Biplomacy,” Pakistan and El Salvador are setting a precedent for alternative economic cooperation models that could offer developing economies a new way to engage with global financial systems. This collaborative effort challenges the existing global financial governance structures and highlights the potential for innovative frameworks to emerge, reshaping the landscape of international finance and diplomacy.
