Han Dieperink: How crypto is creeping into the financial system

July 22, 2025

_{This column was originally written in Dutch. This is an English translation.}

By Han Dieperink, written in a personal capacity

The revolution that began as resistance to the traditional monetary system is slowly but surely being swallowed up by that same system. What once started as a rebellious movement against central banks and traditional financial institutions has now become their latest plaything. The rebellion is being absorbed by the established order, and it remains to be seen whether that is good news.

Gary Gensler, long the arch-enemy of everything crypto, had to step down after Donald Trump's re-election. The man who fought tooth and nail against bitcoin ETFs was replaced by crypto-friendly regulators. The result? An explosion of institutional interest that sent the price of bitcoin soaring. But this was only the beginning. Trump's Digital Asset Market Clarity Act has finally clarified when a crypto asset is a commodity and when it is a security. For the sector, this means the end of heavy regulation.

Impact of institutional embrace

Vanguard, the fund that publicly distanced itself from crypto, is now, ironically, the largest shareholder in MicroStrategy – the company that transformed itself into a bitcoin proxy.

Through index investments, Vanguard became one of the largest indirect bitcoin holders in the world, despite itself. This pattern is now repeating itself worldwide. Some 130 listed companies have started hoarding bitcoin, from Tesla to obscure Japanese companies. Their combined bitcoin holdings now represent £77 billion. Michael Saylor's strategy at MicroStrategy – 100% bitcoin – has led to a 3,400% increase in the share price since 2020.

The Pension Revolution

The most drastic part of Trump's crypto agenda is the announced executive order that would open up the $9 trillion US pension market to crypto investments. The 401k plans, the retirement vehicle of millions of Americans, will gain access to digital assets. Suddenly, ordinary workers will be able to invest in bitcoin through their pensions.

Stablecoins: the Trojan horse

While bitcoin dominates the headlines, stablecoins have quietly become the workhorses of the digital financial system. The recently passed Genius Act in the US Senate – approved by a convincing majority of 68-30 votes – places stablecoins under federal supervision.

For Circle, the issuer of USDC, this is worth its weight in gold. The company was valued at $25 billion within three days of its IPO. For Tether, the pressure is mounting to comply with US standards. The law requires issuers to fully back their reserves with US government bonds and bank deposits.

This is more than technical regulation – it is a geopolitical weapon. By linking stablecoins to US rules, Washington is exporting its monetary system via the digital highway. Major retailers such as Walmart and Amazon are already exploring the possibility of issuing their own stablecoins, which will further undermine traditional payment systems.

As bitcoin becomes more mainstream, it loses what once made it special: the promise of an alternative to the traditional monetary system. Instead of replacing the system, it is now becoming part of it. Bitcoin bulls claim that regulatory clarity and institutional adoption will transform bitcoin from a speculative momentum-driven asset into ‘digital gold.’ Volatility is indeed declining and the correlation with risky markets is decreasing. But for many traders, its emotional and momentum-driven nature was a feature, not a quirk.

Hot air

Bitcoin remains hot air, of course – just like physical gold or trading in CO₂ rights. The difference with paper money was that it was backed by an institutional framework with the state and its monopoly on violence behind it. Until recently, there was no one to guarantee the value of bitcoin. As with gold, it is worth what a fool will pay for it. But that does not mean that investors cannot make money from it. The market capitalisation of all cryptocurrencies is still small compared to the trillions of dollars in stocks and bonds. If everyone were to put just one per cent of their portfolio into bitcoin, the price could skyrocket.

The future of bitcoin

The question is what will happen if bitcoin actually evolves into a boring, stable store of value. Will demand continue if the speculative incentives disappear? And what will happen to companies like MicroStrategy during a prolonged bitcoin dip? Their model of taking on debt to buy bitcoin has never been tested in a bear market.

Trump's crypto agenda may mark a turning point. Bitcoin is on the verge of becoming fully integrated into the financial system it originally sought to circumvent. Pension funds, insurers and banks are gradually gaining more exposure. Revolution is becoming evolution.

But in this process of normalisation, bitcoin may lose its soul. Bitcoin's success as an investment could be the death knell for bitcoin as a revolution. And without that disruptive potential, what justifies its extreme valuation relative to traditional assets? The rebels have been absorbed into the establishment.

More columns by Han Dieperink