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Bitcoin as a Weapon? CIA Targets China with Digital Currency

The CIA now views Bitcoin as a strategic tool in its geopolitical competition with China, according to Deputy Director Michael Ellis. Learn how digital currencies are shaping intelligence, surveillance, and global power dynamics.

Once dismissed as a fringe innovation used by libertarians and cybercriminals, Bitcoin has evolved into a force in global finance and, increasingly, global politics. Now, America’s top intelligence officials are beginning to view it not just as a monetary technology—but as a strategic weapon. In a revealing interview on Anthony Pompliano’s podcast, CIA Deputy Director Michael Ellis described Bitcoin as “another tool in the toolbox” in the United States' geopolitical struggle, particularly against China.

Table of Contents

CIA Sees Strategic Potential in Bitcoin

Ellis, who assumed the role of Deputy Director in early 2021, made it clear that cryptocurrencies are no longer a curiosity in the eyes of national security officials. He stated:

“Bitcoin and other cryptocurrencies are another tool in the toolbox... also a target.”

According to Ellis, digital currencies can serve dual purposes: disrupting the operations of adversaries and gathering intelligence. As cryptocurrencies gain traction globally, their traceable yet pseudonymous nature offers U.S. intelligence agencies a unique opportunity to map financial networks, track illicit activity, and potentially exploit vulnerabilities in the digital strategies of geopolitical rivals.

Targeting China Through Digital Innovation

Ellis’s comments underscore a broader narrative within U.S. national security circles: that technological dominance in emerging fields—including artificial intelligence, quantum computing, and now digital currency—is essential for maintaining strategic superiority over adversaries like China. He emphasized that

“We need to make sure the United States is very well positioned against China and other adversaries.”

China has already launched a central bank digital currency (CBDC), the digital yuan, and is testing it in several provinces. The U.S., by contrast, has taken a more decentralized approach, favoring private-sector innovation in the crypto space. The CIA’s view suggests that embracing Bitcoin and blockchain may become a critical piece of America’s competitive arsenal.

Intelligence Gathering Through Blockchain Analytics

Far from being impenetrable, Bitcoin’s public ledger allows for deep forensic analysis. U.S. intelligence agencies regularly collaborate with blockchain analytics firms to trace transactions associated with criminal enterprises, terrorist financing, and sanctioned nation-states.

Ellis noted that groups like North Korean hackers use cryptocurrencies to move stolen assets, but these same transactions can become intelligence breadcrumbs.

“We can use these technologies to collect more intelligence, gather more information about them,” he explained.

In this way, Bitcoin becomes both a battleground and a surveillance platform, offering insight into adversaries’ digital financial operations.

A Shift in U.S. Crypto Policy

The CIA's evolving view aligns with recent changes in the broader U.S. approach to digital assets. Since President Donald Trump returned to office in January 2025, his administration has adopted a notably pro-crypto stance. Lawsuits against several crypto companies have been dropped, and there are even discussions about creating a national Bitcoin reserve.

Trump has publicly stated his goal to make the U.S. “the crypto capital of the world.” The federal government’s current holdings of Bitcoin—over 198,000 BTC (worth over $19 billion as of this writing)—lend credibility to that ambition. Most of this Bitcoin was seized from criminal actors, but it now represents a form of financial and strategic leverage.

Risks and Contradictions

Despite the optimistic tone from Ellis, the intelligence community remains acutely aware of crypto’s darker side. Cryptocurrencies are used by drug cartels, terrorist organizations, and rogue regimes to circumvent sanctions and law enforcement. The challenge, therefore, lies in leveraging these technologies without enabling their abuse.

Ellis acknowledged this duality:

“Bad actors—whether they’re drug cartels or terrorist groups or outlaw regimes—use cryptocurrency. But they use other tools as well.”

In other words, Bitcoin is not unique in its potential for misuse, but it does offer unique advantages for surveillance and disruption when understood and deployed strategically.

Geopolitical Implications: Crypto as a Digital Arms Race

Framing Bitcoin as a “tool” in the geopolitical toolbox signals a paradigm shift. It means cryptocurrency is no longer just about decentralization or finance—it is about power. If the U.S. can dominate the crypto space, either through innovation or strategic control, it may gain a considerable edge in the 21st-century digital arms race.

The U.S. and China are already competing across a range of technological domains. As blockchain technology becomes more embedded in global infrastructure, Bitcoin and other digital assets will likely become pressure points in this rivalry.

Conclusion

Michael Ellis’s remarks confirm what many have long suspected: that Bitcoin’s importance has moved far beyond the realm of fintech. It is now being seen as a geopolitical asset—both a surveillance tool and a strategic lever.

In the coming years, how nations choose to regulate, adopt, or weaponize digital currencies could shape the balance of global power. And as Ellis’s comments make clear, the CIA is already preparing for that reality.

FAQs

Why does the CIA view Bitcoin as a strategic tool?

The CIA sees Bitcoin as both a means of gathering intelligence and disrupting adversaries’ financial activities. Its transparent yet pseudonymous blockchain makes it useful for tracking illicit funds and understanding the digital strategies of geopolitical rivals like China.

How is Bitcoin being used in geopolitical competition with China?

According to Deputy Director Michael Ellis, Bitcoin represents a new front in the tech race. As China advances its digital yuan, the U.S. is positioning itself through decentralized innovations like Bitcoin to maintain strategic and technological superiority.

Does the U.S. government actually hold Bitcoin?

Yes. As of now, the U.S. government holds over 198,000 BTC—primarily seized from criminal activities—making it the largest governmental Bitcoin holder in the world.

Is Bitcoin being used by criminals?

Yes. Criminals, including hackers and drug cartels, use cryptocurrencies to evade detection. However, intelligence agencies can also trace these transactions using blockchain analytics, turning the technology into a surveillance and intelligence asset.

What are the risks of the U.S. embracing crypto as a strategic tool?

The primary risks include enabling criminal activity and financial instability. There’s also the challenge of balancing national security interests with privacy rights and innovation in the private sector.

That's all for today, see ya tomorrow! If you want more, be sure to follow our X (@croxroadnewsco), Instagram (@croxroadnews.co), Youtube (@thebitcoinlibertarian), Tiktok (@croxroadnews) and nostr - [email protected]

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

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