A fresh report from TRM Labs highlights a significant shift: countries worldwide are no longer inactive in the crypto space. From North Korea to Singapore, many governments are incorporating blockchain technologies into their financial strategies.

However, there’s a clear contrast in how authoritarian and democratic nations engage with digital assets, leading to a growing influence of crypto in international finance and geopolitics.

Transitioning from Market Experiments to State Tools

The report indicates that the borderless nature of blockchain allows nations to transact outside conventional systems like the U.S. dollar or SWIFT, a notably exploited feature by authoritarian regimes.

North Korea is a prime example; TRM has traced substantial cyber activities linked to massive hacks involving exchanges and DeFi platforms, including the notable Bybit breach in February 2025. Investigators revealed that illicit gains were funneled through various crypto networks, clandestinely supporting the regime’s missile and nuclear ambitions as funds returned to Pyongyang.

Conversely, Russia is leveraging cryptocurrencies as a response to stringent sanctions post the 2022 Ukraine invasion. While crypto has not supplanted conventional finance, TRM’s findings suggest it now complements international transactions, fundraising for allied factions, and facilitating extensive mining operations.

Meanwhile, Iran, which legalized Bitcoin mining in 2019, utilizes mined BTC to circumvent payment constraints on imports.

Divergence in Crypto’s Path Ahead

Not all government engagement with cryptocurrency is antagonistic. In democratic contexts, there is a push for transparency, regulation, and market oversight.

For example, agencies in both the U.S. and Europe now utilize blockchain analysis to track ransomware transactions, enforce sanctions, and aid cross-border probes. Europe’s recent MiCA regulations mandate rigorous licensing for cryptocurrency entities, while the U.S. is continuously refining guidelines through organizations like FinCEN and OFAC.

In Asia, nations like Singapore and Japan are establishing cooperative frameworks with the private sector for compliance technology and enhancing trading supervision. Furthermore, several central banks in this region are experimenting with digital currencies and tokenized reserves, combining concepts from public blockchain structures with stringent state oversight.

The report suggests a growing rift between authoritarian regimes leveraging crypto for evasion and countries like Singapore, using similar technologies to innovate financial operations. TRM posits that this delineation will likely expand, with non-democratic states persistently seeking crypto solutions for limitations on their operations, while democracies advocate for regulations that tether growth to accountability.