[Column] Bitcoin Becomes a Military Strategic Asset—Two Signals from Washington

On the same day, the top commander of the U.S. military and the nominee for the central bank both expressed support for Bitcoin. This is no coincidence.

“Power Projection(Power Projection)” was originally a military term referring to a country’s ability to project its economic, political, and military power beyond its borders. For the past hundred years, the U.S. dollar has been the most powerful tool for American power projection. However, last week in Washington, after taking the oath at a Senate hearing, a four-star U.S. general said the following.

“Bitcoin is a tool for power projection.”

On the same day, at another hearing, a Federal Reserve(Fed) chair candidate who holds Bitcoin as a personal asset expressed his willingness to assume office.

The military and the central bank do not coordinate their testimonies. However, both signals point in the same direction simultaneously.

“Commander, is Bitcoin a safe asset?”

Last week, U.S. Indo-Pacific Command Commander Samuel Paparo(Samuel Paparo) attended a Senate Armed Services Committee hearing. He is a four-star general overseeing the entire Indo-Pacific region. The person responsible for the most critical area of U.S. military strategy mentioned Bitcoin during his public testimony.

“Bitcoin as a tool for power projection is a valuable computer science technology. It has very important potential applications in cybersecurity.”

He went further, revealing publicly that INDOPACOM(INDOPACOM) is currently running Bitcoin nodes in practice to test military cybersecurity. This is not theoretical; it is real combat.

This is the first time in history that an active U.S. military combat commander has characterized Bitcoin as a national security asset in a public congressional testimony.

The background is crucial. It is reported that a think tank under the People’s Bank of China is currently circulating an internal report on Bitcoin reserve assets. This means both China and the U.S. are exploring Bitcoin’s strategic value simultaneously. Paparo’s remarks are not merely personal opinions but should be seen as a signal indicating Bitcoin’s position in U.S. national security strategy.

The Federal Reserve Chair candidate’s investment portfolio

On the same day, the Senate Banking Committee held a confirmation hearing for Kevin Warsh(Kevin Warsh), President Trump’s nominee for the next Federal Reserve Chairman.

Warsh stated during the hearing that he would defend the Fed’s independence and previewed a “regime change(regime change)” at the Fed. The core elements include a smaller balance sheet, fewer policy meetings, and a new inflation framework. This represents a fundamental redesign of current monetary policy.

[Photo: Kevin Warsh, Fed Chair candidate, attending Senate approval hearing]

However, he has an unprecedented background. Warsh is the first Fed chair candidate in history to have invested heavily in Bitcoin. He has previously publicly called Bitcoin a “sustainable store of value like gold.”

Over the past century, the Federal Reserve has continuously diluted the value of the dollar. If those who understand Bitcoin’s value become Fed chairs, the possibility of Bitcoin becoming more deeply integrated into the U.S. financial system will open. This is a completely new situation.

The true face of decentralization: two events in the same week

During the week when the commander characterized Bitcoin as a national security asset, Ethereum-based projects claiming “decentralization” showed a starkly different reality.

Arbitrum Freeze Event

The security council of Ethereum Layer 2 network Arbitrum took emergency on-chain action, freezing 30,766 ETH (about 71 billion Korean won) linked to a hacker incident involving KelpDAO bridge. At the request of law enforcement, a few insiders controlled the user funds via multi-signature.

The exploit related to this incident, worth $292 million, has caused the total value locked(TVL) in DeFi to decrease by $13.2 billion.

From a technical perspective, dozens of insiders signing multi-signature transactions to transfer funds at the protocol level is similar to how banks operate. Bitcoin has no administrator keys. No foundation has intervention authority. No committee can freeze specific UTXOs (Bitcoin balance units). This is the core of Bitcoin.

Sun Yuchen and legal proceedings involving the Trump family

TRON(Tron) founder Sun Yuchen sued a cryptocurrency company related to the Trump family, World Liberty Financial(WLFI), in a federal court in California. He claims WLFI froze his tokens worth over $1 billion at one point because they refused to make additional investments worth hundreds of millions of dollars. He also accused WLFI of secretly modifying its rules and granting itself the authority to blacklist token transfers. WLFI responded that the lawsuit is “completely unfounded.”

Setting aside the merits of this lawsuit, its structural lesson is the same as the Arbitrum incident. In crypto systems with administrators, foundations, or multi-signature controls, these powers will ultimately be exercised—whether against strangers, former allies, or even trusted officials of the president.

The ongoing global wave of Bitcoin adoption

In the same week, Bitcoin adoption continued to accelerate.

The Russian State Duma overwhelmingly passed a bill classifying Bitcoin as legal property with 327 votes in favor and 13 against. State-owned Sberbank announced it will offer Bitcoin trading services to its 110 million personal clients.

Uzbekistan issued a presidential decree establishing the “Besqala Mining Valley(Besqala Mining Valley)” and created a system offering tax exemptions until 2035 for certified Bitcoin mining companies, with a monthly fee of 1%.

In Japan, Nomura Securities(Nomura) and Laser Digital’s 2026 institutional investor survey showed that 79% of Japanese institutional investors plan to allocate assets to Bitcoin within the next three years.

In the UK, three Bitcoin-related exchange-traded notes(ETN) were approved for trading within the innovative financial ISA (Individual Savings Account), reopening a tax-free investment channel for retail investors in Bitcoin.

Global financial infrastructure company Broadridge, which processes $8 trillion in transactions monthly, launched a Bitcoin platform for Canadian asset management firms.

Will artificial intelligence make money redundant?

This week, another debate emerged within the industry. Elon Musk proposed that the productivity gains brought by AI and robotics are so significant that governments could implement “universal high income(universal high income)” programs without triggering inflation. He even predicted that prices might fall as a result.

Economist Peter C. Earle(Peter C. Earle) countered, saying this argument is intuitively appealing but structurally wrong.

The core of Musk’s argument is simple. If inflation is viewed as the ratio ‘USD ÷ goods,’ then when the denominator (goods) grows faster than the numerator (USD), prices will fall. However, prices are not determined by total quantities. They are formed relatively at the intersection of various industries, decisions, demand, supply, and expectations. The movement of these relative prices is the mechanism that coordinates what, how much, and when to produce. Distorting it would cause deviations in the production structure itself.

There is a more fundamental issue. Newly issued money never flows evenly or simultaneously into the entire economy. Money enters through specific channels—government transfers, banks, asset markets. Those closest to these faucets benefit first and most. Those farther away bear the costs. This is the ‘Cantillon Effect(Cantillon Effect),’ first systematically described by Irish-French economist Richard Cantillon in the 1730s. Regardless of how explosively AI-driven productivity increases, this effect will not disappear.

Bitcoin’s total supply is fixed at 21 million. No one can create new Bitcoin and distribute it through political networks. In a Bitcoin-based economy, productivity gains driven by AI will directly translate into increased purchasing power. Prices will fall, and those who delay consumption will benefit.

If, as Musk suggests, AI can greatly enhance productivity, the only way to make this abundance accessible to ordinary people is to anchor the economy on a currency that no one can arbitrarily issue more of.

From military strategy and central bank policy to DeFi failures and monetary theory, all these stories point in the same direction.