Crypto Helps Emerging Economies Bypass Legacy Financial Constraints

Opinion by: Andrei Grachev, managing partner at DWF Labs

Bitcoin’s role in sovereign finance is no longer hypothetical. 

As nation-states reassess reserve strategies amid inflation, sanctions and dollar volatility, crypto, particularly Bitcoin and stablecoins, is emerging as a neutral, programmable asset class with sovereign-grade utility.

The properties that crypto can wield for retail users can also be applied on an enterprise and institutional level, where forward-thinking businesses can add it to their balance sheets and even use assets such as BTC and stablecoins to settle B2B transactions. Blockchain doesn’t discriminate and is equally suited to benefiting businesses as it is to individual users.

Let’s examine crypto in a national context. Does it have the ability to work as faithfully for governments and national economies as it does for institutions and retail? While the sample size for making this assessment is currently small — El Salvador, Bhutan and a handful of others — there’s growing evidence that crypto can benefit emerging economies, especially as several developing nations are starting to discover it.

Pakistan enters the game

With a population of over 240 million and a GDP of over $1.25 trillion, Pakistan has a well-developed economy and is no banana republic. It’s a country that is going places, with robust growth and low public debt. Like several other South Asian countries, however, it suffers from high CPI inflation of over 10%. In many respects, it shares many similarities with a country that lies on a distant continent and with which its name has been rarely mentioned until now: El Salvador.

The two nations appear destined to be cited in the same breath now that the Pakistan Crypto Council has been established to form a Strategic Bitcoin Reserve (SBR). It’s not just toying with the idea — as a statement of intent, it’s got no less of an advocate than Michael Saylor onboard and backing the initiative.

It’s a bold venture from a country that’s still regarded as highly conservative in many spheres and one that’s destined to spotlight the benefits that crypto can bring to emerging economies. Spoiler alert: The potential advantages extend far beyond “number go up” investing. If judiciously applied, countries that shrewdly stockpile crypto assets have the ability to catalyze economic growth by bypassing the constraints of legacy finance.

A global game of chicken

While America’s proposed establishment of an SBR…