BTC Trojan Horse: How Stablecoins, Wall Street, and the State Could Rewire Money

Encryption Wars|November 14, 2025 (1w ago)Anonymous

Thesis: Bitcoin may be less an outsider insurgency and more a Trojan horse for a dollarized, surveilled, and Wall-Street-intermediated digital money stack—one that exports U.S. monetary power via stablecoins, folds BTC into capital markets plumbing, and tightens tax and compliance rails. That could be by design, by drift, or by a mix of both.

TL;DR

• Stablecoins (USDT/USDC and the like) tether most crypto liquidity to U.S. Treasuries, creating dollar demand and exporting inflation dynamics abroad.
• Wall Street integration (spot BTC ETFs, generic ETP listing standards) brings Bitcoin under familiar rules, custody, and surveillance.
• Policy rails (e.g., the GENIUS Act for stablecoins; IRS 1099-DA) standardize issuance, intermediaries, and reporting—turning the crypto stack into compliant, taxable flows.
• State visibility & leverage are real: blockchain tracing (Colonial Pipeline case), device-level pressure (Apple–FBI, 2016), and even roots of Bitcoin’s hash (NSA-designed SHA-256) complicate the “sovereign privacy” narrative.
• Geopolitical framing: Russian officials argue the U.S. will use a “crypto cloud” to devalue dollar liabilities globally—functionally an export of inflation via digitized dollars. Treat it as their claim, but the mechanics deserve scrutiny.

1) Dollar Gravity: Stablecoins as the Dollar’s New Rails

Stablecoins are the bridge between “crypto” and the U.S. monetary base. Issuers park reserves (overwhelmingly short-dated Treasuries and cash) to maintain pegs; users abroad hold tokenized dollar IOUs on phones. Net effect: dollar reach extends while demand for T-bills rises. Research from Treasury, BIS, and others has begun to quantify this linkage.

Why this matters for the Trojan Horse view:

• Monetary power rides along. If stablecoin float scales, so does structural demand for T-bills. The dollar footprint deepens—inside crypto’s supposed parallel system.
• Inflation export channel. When the dollar is inflated at the core, tokenized dollars abroad share the dilution; the “tax” lands on global holders of dollar-linked tokens. (Mechanism explained in §5.)

2) Wall Street’s Embrace: From HODL to “Ticker: BTC”

Regulators approved spot Bitcoin ETFs (Jan 10, 2024), turning BTC into a brokerage-account primitive. In 2025, the SEC also adopted generic listing standards for commodity-backed ETPs, a rule change that paves more predictable paths for crypto-linked exchange products. Result: broker-custodians, market makers, and auditors sit between most investors and coins.

Trojan Horse angle: once BTC lives behind 40-Act funds, DTCC tickers, prime brokers, and regulated custodians, it moves under infrastructure the state already supervises—KYC, AML, blue-sheeting, and surveillance of flows.

3) The Policy Stack: From “Wild West” to Form 1099-DA

Two milestones that quietly change everything:

• The GENIUS Act: a U.S. federal framework for dollar-backed stablecoin issuers—bank, trust, or specially approved non-bank—setting capital, reserves, examinations, and redemption obligations. This normalizes U.S. dollar stablecoins as regulated money products.
• IRS 1099-DA: brokers must report digital-asset proceeds for transactions from Jan 1, 2025, with phased basis rules after. Compliance dates, FAQs, and final regs make tax visibility default.

Add in the longstanding CFTC/SEC posture that treats Bitcoin distinctly as a commodity (not a security), and you have a clean regulatory lane for BTC to sit alongside gold and oil in U.S. markets.

4) Surveillance & Leverage: The “Encryption Wars” Lens

• On-chain tracing works. The DOJ’s Colonial Pipeline seizure showed federal agencies can follow flows and recover BTC when they control key chokepoints.
• Device & platform pressure. The 2016 Apple–FBI fight showed the government will use the courts (All Writs Act) to compel assistance—even without mandating a universal backdoor.
• Crypto-privacy prosecutions. Mixers and privacy wallets continue to see enforcement; even as Tornado Cash was delisted in 2025 after a court setback for OFAC, DOJ cases against privacy-tool developers (e.g., Samourai) advanced—with convictions and sentencing. The signal: privacy rails face legal contest, not blanket permission.
• Cryptographic roots. Bitcoin’s hash function (SHA-256) was designed by the NSA for NIST. There’s no proof of a trapdoor—and the function is widely trusted—but the provenance feeds a reasonable, skeptical posture within an “encryption wars” frame.

Trojan Horse angle: when the stack routes through known intermediaries (issuers, custodians, app stores, clouds) and known primitives (ETFs, tax forms), coercive leverage can be applied off-chain even if keys are mathematically solid.

5) “Debt in the Crypto Cloud”: Interpreting the Russian Claim

At the Eastern Economic Forum, Putin adviser Anton Kobyakov claimed the U.S. is pushing the world into a “crypto cloud” to later devalue its $37T debt—using stablecoins and crypto rails to spread the cost globally. Treat this as geopolitical messaging, but examine the plumbing:

• Debt devaluation 101. You borrow $100, expand the money supply to $200; nominally repay $100 that now buys half the goods. That’s inflation doing the work.
• Tokenized distribution. If dollar liabilities are increasingly held as stablecoins around the world, dollar inflation “taxes” holders everywhere, not only U.S. bank-depositors. The rails widen the blast radius (and the political deniability) because they’re private-issuer tokens, not a CBDC.

Caveats: Not all stablecoin reserves are fully transparent in real time; issuer disclosures and audits vary. The U.S. can change rules mid-game (see 1971 gold window), so foreign trust is limited. This is why central banks have been buying gold and exploring non-dollar options.

6) The Saylor Gambit: Strategic Bitcoin Without the Optics

Michael Saylor has publicly urged U.S. leaders to sell gold, buy Bitcoin, and treat BTC as a strategic reserve—arguing it would demonetize gold (which adversaries hold) and re-rate U.S. balance sheets. Whether one agrees or not, it’s a blueprint for state-aligned accumulation conducted via private balance sheets (ETFs, public companies) first—and only later absorbed or backstopped by government.

Trojan Horse angle: let corporations and funds warehouse BTC under U.S. law, custody, and surveillance; keep the policy option to commandeer, stake, tax, or lean on those inventories if geopolitics demands it.

7) How the System Could Reset—Without Saying “Reset”

Picture a three-layer stack:

1. Base: Dollar-pegged stablecoins scale to trillions, backed by T-bills, governed under GENIUS. The dollar’s API surface expands worldwide.
2. Reserve-like Asset: Bitcoin sits in ETFs, insurers, treasuries, and public-company treasuries. It’s a collateral and portfolio primitive inside the U.S. capital markets’ field of view.
3. Control Plane: Tax forms (1099-DA), bank secrecy rules, exchange surveillance, app-store policies, and data-extraction powers bind the edges where on-chain meets people, devices, and firms.

A “reset” under this architecture doesn’t need a single silver-bullet event. It can emerge from policy drift: export more dollars via stablecoins, dilute in waves, accumulate strategic assets by proxy, and let market infrastructure do the integrating.

8) Objections & Rebuttals

• “Bitcoin is decentralized; the state can’t co-opt it.”
  True at the protocol layer. But the user layer sits in ETF wrappers, custodians, exchanges, phones, clouds, and ISPs—all regulable.

• “Stablecoins strengthen the dollar; that’s good.”
  Maybe. But concentration of dollar rails inside few issuers creates new single points of failure and policy levers. BIS/Treasury research flags both benefits and fragility.

• “This is conspiratorial.”
  The thesis does not claim a single mastermind. It argues incentives (Wall Street fees, dollar hegemony, tax visibility, surveillance leverage) naturally push the stack toward state-compatible equilibrium—Trojan Horse by design or by drift.

9) Practical Signals to Watch

• Stablecoin float vs. T-bill holdings. If issuers rival large foreign holders, the dollar-rail thesis is playing out.
• ETF share of BTC supply. Rising fund share = more surveillance & policy leverage through regulated pipes.
• Reporting & withholding expansions. Where 1099-DA goes next (basis, DeFi taxonomy) shows the compliance frontier.
• Privacy-tool jurisprudence. Post-Tornado Cash and Samourai precedents will set limits on financial anonymity tech.

10) So What?

For builders and citizens in the Encryption Wars era:

• Treat BTC as apolitical math but political rails. Protocol is neutral; pipes are not.
• Assume surveillance at the edges. Harden devices; diversify custody; understand where you touch the regulated perimeter.
• Model stablecoin risk like you would money-market funds—with issuer, reserve, jurisdiction, and rule-change risk.
• Expect more policy-driven “normalization.” The direction is set: compliant wrappers, tax forms, and more intermediation.

Sources & Notes

Key public references on ETFs, stablecoins, policy, and surveillance:

• SEC & ETFs: First U.S. spot BTC ETFs approved (Jan 10, 2024); later generic listing standards for commodity ETPs.
• Stablecoin–Treasury link: U.S. Treasury/TBAC note; BIS research on stablecoin flows and T-bill demand.
• GENIUS Act (U.S. Stablecoin law): bill text and White House FAQ.
• IRS 1099-DA (digital-asset reporting): IRS final regs + FAQs.
• On-chain surveillance precedent: Colonial Pipeline BTC recovery (DOJ/Reuters).
• Apple–FBI (2016): All Writs Act dispute overview (ACLU).
• SHA-256 origin: NIST algorithm by NSA.
• Geopolitical “crypto cloud” claim: Anton Kobyakov (EEF) coverage.
• Privacy-tool legal posture: Tornado Cash delisting (post-appeal); Samourai founders’ guilty pleas/sentencing.

Appendix: Debt Devaluation, in Plain English

If money supply grows faster than real output, prices rise (inflation). Debtors repay in cheaper dollars; creditors eat the loss. If the rails holding those dollars are global and tokenized (stablecoins), the loss disperses globally. That’s not a default; it’s a policy choice masked as market dynamics. Nixon closing the gold window in 1971 is the canonical reminder that rules can change when it suits sovereign interests.