I. Introduction: Framing Digital Governance in the Global Political Economy
1.1. The Critical Intervention of Bitcoin and Beyond
Bitcoin and Beyond: Cryptocurrencies, Blockchains, and Global Governance, edited by Malcolm Campbell-Verduyn, represents a seminal academic intervention into the complex relationship between emergent decentralized digital technologies and established structures of global authority. The publication, situated around 2017/2018, coincided with a pivotal moment in the cryptocurrency ecosystem, when market capitalization surged from approximately $1.5 billion in early 2013 to over $795 billion by January 2018, marking the technologies' transition from a fringe political experiment to a globally significant financial phenomenon.1 The subsequent expansion, reaching a market capitalization exceeding $2 trillion by 2024, underscores the sustained relevance of the governance challenges first articulated in this volume.2
The book distinguished itself by adopting a profoundly interdisciplinary perspective, bringing together scholars from diverse fields including Global Political Economy (GPE), Science and Technology Studies (STS), anthropology, economics, and sociology.3 This breadth was crucial for moving beyond purely technical or economic assessments, providing what was described as a more nuanced understanding of technological change in the shifting character of governance within and across nation-states.4 A critique from the Department of International Politics at City University London specifically highlighted the necessity of this work, noting that academics had been slow to grasp the significance of the cryptocurrency revolution and characterizing the book as one of the first thorough, comprehensive, and accessible examinations of the challenges posed by this new world.3 The volume’s early recognition of the major challenges cryptocurrencies posed to monetary policy, financial stability, and money laundering control established it as a foundational text for analyzing the escalating stakes in digital governance.
The central task of this report is to provide an expert-level assessment of the book’s core theoretical claims—particularly the concept of mutual constitution—and evaluate their predictive and explanatory power against major empirical developments that have transpired since its publication. These developments include significant state-level regulatory divergence, the institutional responses to systemic financial failures, and the real-world outcomes of using crypto-remittances for financial inclusion in the Global South. The analysis will demonstrate how the book’s framework continues to provide essential insight into how non-state actors, technical systems, and traditional authorities mutually determine the evolving global financial and social order.
1.2. Structure of the Expert Assessment
This comprehensive assessment proceeds through four analytical steps. Section II deconstructs the theoretical core of the volume: the mutual constitution framework, using the Financial Action Task Force (FATF) as a key case study. Section III examines the internal governance fragility of blockchain-based organizations, analyzing how failures like the Mt. Gox collapse and The DAO exploit forced centralized interventions and shaped external regulatory perception. Section IV provides a comparative analysis of major post-2018 state regulatory responses, specifically contrasting the policy paths taken by China, Russia, and the United States. Finally, Section V analyzes the application of cryptocurrencies to socio-economic goals, specifically assessing the financial inclusion paradox evident in crypto-remittance markets, notably the case of El Salvador.
II. The Theoretical Core: Deconstructing the Mutual Constitution Framework
2.1. Defining the Dialectical Relationship (Chapter 4 Analysis)
A key contribution of Bitcoin and Beyond lies in its adoption of the concept of "mutual constitution" to explain the co-evolution of technology and global governance, a framework primarily elaborated in Chapter 4.5 This framework intentionally navigates a path between technological determinism (where technology unilaterally drives social change) and social determinism (where governance structures solely dictate technological outcomes). Instead, it posits a dialectical relationship wherein socio-technical environments both condition the possibilities and constraints underpinning global governance interactions and are, in turn, profoundly influenced by the specific relations of competition, collaboration, and conflict among state and non-state actors operating within international regimes.5
The significance of this framework rests on its ability to offer nuanced understandings of the governance implications of technological change, parsing through the pervasive techno-dystopian and techno-utopian hype surrounding blockchain discussions.5 Crucially, the analysis highlighted how emergent technologies enhance the relative power of some actors over others, and simultaneously re-constitute the interests and perceptions of their users.5
2.2. Empirical Validation: The FATF and the Choke-Point Strategy in AML Governance
The power of the mutual constitution framework is vividly illustrated through its application to the international Anti-Money Laundering (AML) regime, largely centered on the Financial Action Task Force (FATF).6
The Constraint Imposed by Technology
The first step in the mutual constitution process involves demonstrating how the specific technical features of blockchain technologies—primarily decentralization and quasi-anonymity—shaped and constrained the international AML regime’s response.5 Actors such as the Bank of International Settlements (BIS), the International Monetary Fund (IMF), and Europol initially viewed the applications of blockchain technologies as fundamentally challenging their control efforts, stressing their potential for illicit use.6
The core challenge for the FATF was the lack of a central location or entity to target, which undermined the ability to employ effective sanctions or trace illicit proceeds through traditional means.6 A conventional governance strategy based on coercive targeting of centralized financial intermediaries would be ineffective in a truly distributed system. Thus, the decentralized and quasi-anonymous characteristics of the technology dictated the boundaries of possible governance responses.6
Governance as Shaper: The Re-Articulation of Control
The second step in the framework analyzes how the governance response, shaped by the technology, subsequently constrains and guides the evolution of that technology. The FATF adapted its strategy by shifting its focus from individual users and decentralized transactions to centralized points of control within the ecosystem—the CC-to-fiat money exchanges.6
This became known as the "choke-point strategy." The FATF’s guidance recommended a flexible, decentralized approach to enforcement where centralized exchanges were mandated to voluntarily enact Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements.6 The FATF encouraged formal registration and monitoring of these entities, effectively outsourcing the regulatory burden onto these centralized intermediaries. Furthermore, the FATF called for less coercive "coordination mechanisms" between state and non-state actors, such as knowledge sharing and mutual legal assistance, recommending outright prohibition only as a last resort, given the risk of driving activities further underground.6
The critical implication of this development is that the concept of mutual constitution accurately predicted that decentralization would not eliminate governance, but rather force its re-articulation at nodes of intersection with the regulated financial order. By adapting its strategy to target these centralized exchanges, the FATF successfully outsourced control. This institutional adaptation provides a crucial defense of the book's argument against critiques of technological determinism; the technology sets the parameters, but the regime (FATF) determines the strategy within those parameters, thus confirming the dialectical nature of the co-evolutionary process.6 Ultimately, the regulatory response of the AML regime influences the path of the emerging technology, suggesting that the drive for centralized control in digital identity governance is significantly stemming from the global governance of financial flows long considered by international organizations.6
III. The Mechanics of Decentralized Governance: Fragility, Failure, and Recalibration
3.1. Internal and External Governance Mechanisms in Blockchain Organizations
The volume analyzed the specific governance mechanisms necessary for blockchain-based organizations, identifying both internal structures and external influences. Chapter 3 detailed the internal governance mechanisms, arguing that factors like consensus mechanisms (e.g., Proof-of-Work), levels of decentralization, the distribution of decision rights, and ownership concentration (whale ownership) play a critical role in shaping the perceived value and performance of these platforms.7 For instance, high decentralization is theorized to align better with computationally intensive consensus mechanisms where power is shared equally, while low decentralization may favor simpler proof-of-authority mechanisms.7
However, these systems are not hermetically sealed. The book also emphasized the role of external governance mechanisms, which influence organizations less through formal control or ownership rights, and more through informal social mechanisms such as social evaluations, reputation effects, and public image.5 Critically, external scrutiny is often triggered by, and functions as a response to, failures in internal organizational governance.5
3.2. Governance Failures as Catalysts: Mt. Gox and The DAO
The study of systemic failures provides powerful evidence that the pursuit of purely algorithmic governance remains inherently subject to social evaluation and political pressures. The book examined several controversial events as critical junctures that resonated across the ecosystem and triggered external governance responses.
The Mt. Gox Collapse
The operational and financial failure of the Mt. Gox exchange, including the freezing of its US accounts, served as an early indicator of systemic risk and the fragility of centralized crypto intermediaries.10 This event was pivotal because it empowered more moderate voices within the Bitcoin community and provided regulators with a clear narrative distinction between "unwelcome criminal actors and welcome innovation".10 By providing a recognizable crisis, the collapse offered a justification for powerful incumbent actors to engage with the technology in a moderated, regulatory-compliant manner.
The DAO Exploit and Algorithmic Failure
The resonance of the Mt. Gox story was later observed in the case of "The DAO," a short-lived Decentralized Autonomous Organization on the Ethereum blockchain that served as a major experiment in algorithmic governance.8 Chapter 8 of the book utilized an ethnography and history of this failed experiment to describe emerging forms of algorithmic governance.9 The massive hack that occurred threatened to upend the entire Ethereum community, demonstrating that systemic governance flaws were not unique to traditional, centralized corporate structures.11
The large-scale, visible failure of The DAO—despite its intended decentralized and immutable nature—forced a centralized, political decision by the community to implement a "hard fork." This demonstrated the inherent limitations of the ideology encapsulated by "code is law" and generated a significant crisis of trust and legitimacy within the emerging ecosystem.4 The necessity of the hard fork confirmed that even decentralized, ostensibly immutable systems are ultimately subject to the social evaluation and political consensus of their users when a failure is severe enough.
3.3. The Role of Resonance in Mutually Constituting Regulatory Environments
The analysis reveals that governance failures serve as critical junctures that dictate the timing and scope of external intervention. The concept of "resonance" 11 explains this dynamic: external governance is not merely triggered by the existence of risk, but by the visible, large-scale, and recurring nature of high-profile systemic failures.
The finding that decentralized, immutable, and consensus-driven systems have significant limitations as legitimating tools highlights the interconnectedness of political trust and legitimacy in governance processes.4 Internal governance flaws are, therefore, the primary cause driving the effect of external regulation. Had failures like The DAO been minor, the community might have absorbed the loss, preserving the original ideals. Because the exploit was substantial, it resonated, triggering sufficient community and external pressure to compromise the original principles (immutability) for stability, thereby confirming the persistent influence of social and reputational effects.5
IV. Comparative Regulatory Divergence Post-2018: Testing the State-Level Thesis
Chapter 5 of the volume introduced the varied state responses to cryptocurrencies, characterized broadly as "between liberalization and prohibition." Post-2018 geopolitical developments have provided extensive empirical evidence to refine this dichotomy, showing that regulatory paths are increasingly determined by strategic state interests, sovereignty maintenance, and financial necessity, rather than simply technical assessments of risk.
4.1. The People's Republic of China: Prohibition, Sovereignty, and State Control
China has adopted the most explicitly prohibitive stance, viewing decentralized finance (DeFi) as a challenge to its financial sovereignty. The nation has instituted an "absolute ban on cryptocurrencies," which was significantly escalated in 2021 with a comprehensive crackdown focusing on mining and trading activities that had previously dominated the global Bitcoin market.2 This strict policy is driven by multiple concerns, including mitigating risks related to financial stability, preventing capital outflows, and ensuring robust investor protection.2
This restrictive approach is understood not merely as regulatory caution, but as "emblematic of a broader strategy to maintain dominance over the country's financial systems" and prevent decentralized assets from competing with state-run channels.2 However, this stance is dualistic. While decentralized cryptocurrencies are banned, the Chinese Communist Party (CCP) remains "the most bullish party regarding the blockchain," viewing the underlying technology as a vital tool for the future of the global economy and international trade.2 This enthusiasm is evident in the implementation of the Cryptography Law and the extensive real-world trials of the state-controlled Central Bank Digital Currency (CBDC), the Digital RMB, which included issuing digital currency to nearly 50,000 people in test cities like Shenzhen.2
China’s regulatory actions have had undeniable, immediate, and substantial global ripple effects. Regulatory announcements, such as the 2013 bans, led to Bitcoin value declines of up to 50%, and the 2021 trading ban caused significant negative spillover effects on fintech firms globally, demonstrating the profound reach of sovereign decisions in this ecosystem.2
4.2. The Russian Federation: Sanctions, Resilience, and Strategic Ambiguity
Russia’s regulatory trajectory is uniquely shaped by its strategic need for financial resilience in the face of international economic sanctions. In 2020, Russia introduced the "On Digital Financial Assets" (DFA) law, which came into effect in January 2021.12 This legislation established clear legal categories for digital financial assets but maintained a critical restriction: it explicitly prohibits the use of cryptocurrencies for transactions within Russia, affirming the Ruble as the sole legal tender.12
Under sanctions, cryptocurrencies have become a vital financial alternative for some actors. Medium-sized enterprises, facing complications in cross-border transactions through traditional banking, have increasingly adopted cryptocurrency to circumvent economic restrictions.12 This reliance on decentralized technology for extralegal commerce is an unintended consequence that forces the state to engage with the asset class, thus confirming the mutual constitution framework at a macro-political level.
In contrast, large corporations demonstrate reluctance due to persistent security concerns, the volatility of digital assets, and ongoing regulatory uncertainty.12 These major firms often prefer to establish legal entities in foreign jurisdictions, such as the UAE or Armenia, to access reliable foreign banking systems, illustrating a measured corporate strategy that balances the need for resilience with the aversion to high-risk instability.12 Similar to China, the Russian government is also actively developing its own state-controlled solution, the Digital Ruble, recognizing the potential of digital currencies while retaining central authority.12
4.3. The United States: Existing Labyrinths and Fragmentation
The regulatory approach of the United States contrasts sharply with the explicit prohibition seen in China. The U.S. has generally sought to place cryptocurrencies within its existing, complex "legal labyrinth," resulting in a fragmented approach where assets are classified differently (as securities, commodities, or currencies) depending on the governing agency (e.g., SEC or CFTC).1
Scholarly comparisons between the two major economic powers indicate that the U.S. did not require an absolute ban because its financial system, already robustly structured by existing laws covering securities and commodities, could absorb the new technology through interpretation.13 China’s need for the outright ban arose from specific internal concerns regarding capital control and the essential requirement of the Chinese Communist Party (CCP) to maintain centralized authority over all major financial flows.2
The post-2018 regulatory landscape strongly refines the book’s initial theoretical categorization. The regulatory divergence is now less about managing abstract market risk and more about geopolitical strategy. China’s approach constitutes an offensive measure to consolidate state financial power, while Russia’s controlled integration represents a defensive maneuver for national resilience against external pressure. This dynamic competition between State Sovereignty and Global Financial Necessity is arguably the central policy theme governing decentralized assets today.
The following table summarizes the observed divergence in regulatory approaches following the book's publication period:
Comparative Regulatory Responses to Decentralized Currencies (Post-2018)
V. Cryptocurrencies, Remittances, and the Financial Inclusion Paradox
5.1. The Theoretical Promise of Digital Payment Rails (Chapter 6 Analysis)
Chapter 6 of Bitcoin and Beyond explored the potential role of cryptocurrencies and digital payment rails in networked financial systems. The academic literature, including institutional reports from organizations like the World Bank, recognized that cryptocurrencies hold significant promise for developing economies.14 Potential benefits include cheaper cross-border remittances compared to traditional providers, simplified transactions, increased speed, and secured delivery of services to the unbanked population.15 Case studies focusing on countries like Nigeria, the Philippines, and Venezuela have highlighted the potential for restructuring inefficient remittance systems and increasing financial stability.15
However, this theoretical potential is tempered by crucial caveats. Academic literature consistently stresses that financial inclusion facilitated by crypto is "fragile without complementary policies" such as local exchange infrastructure, financial education, and robust consumer safeguards.14 Furthermore, the geopolitical dimensions are complex; while migrants sometimes use cryptocurrencies to bypass foreign exchange restrictions in politically unstable regions, demonstrating technological resilience, this practice also raises serious concerns about systemic risk and regulatory oversight.14
5.2. Empirical Analysis: El Salvador’s Experiment in Financial Inclusion
The most high-stakes empirical test of cryptocurrencies’ potential for financial inclusion occurred in El Salvador, which adopted Bitcoin as official legal tender with the explicit goal of lowering remittance costs and promoting access to financial services for the unbanked.17
Post-Implementation Assessment
Institutional and academic evaluations following the implementation reveal a significant gap between policy ambition and real-world outcomes. Analysis by the IMF indicates that, more than a year after adoption, the use of Bitcoin as legal tender had not led to visible improvements in financial inclusion.17 Despite the government dedicating substantial public funds to subsidize Bitcoin transaction costs, the acceptance and use of the asset by the unbanked population and firms remained minimal.17
The primary use case observed was not financial services access, but high-risk investment. Bitcoin, a volatile asset, was used for speculative purposes, fundamentally failing to meet the foundational inclusion objectives centered on the needs of the financially vulnerable population.17 The project was further identified as involving sizeable risks, including governance issues, consumer protection deficits, and fiscal contingencies related to market volatility.17
The Paradox of Volatility and Vulnerability
The El Salvador case reveals a critical paradox: a technology designed to reduce transactional friction (lowering remittance costs) inadvertently amplified underlying socio-economic friction (volatility risk, lack of trust). The problem of financial exclusion is often structural, related to access to stable assets and credit, not merely transactional cost.18 While remittances might positively impact financial inclusion by promoting the use of deposit accounts, they do not consistently increase the demand for or use of credit from formal institutions.18
The policy decision to mandate a highly volatile asset (Bitcoin) as legal tender for the most financially vulnerable populations represents a self-defeating strategy, demonstrating the failure of governance to mitigate risk. The observed outcome—utilization for speculation rather than essential financial services—confirms that governance structure and policy decisions ultimately determine the social impact of technological potential.17
The following table summarizes the observed outcomes and governance challenges associated with crypto-remittances:
Assessment of Crypto-Remittance Outcomes and Governance Risks
VI. Conclusion: The Persistence of Blockages in Global Governance
6.1. Evaluating the Book's Enduring Theoretical and Predictive Contributions
Bitcoin and Beyond: Cryptocurrencies, Blockchains, and Global Governance successfully provided a robust and anticipatory analytical framework for understanding the governance challenges posed by decentralized digital assets. Published at an early stage of mass adoption, its central thesis of mutual constitution has proven enduringly valid. The post-2018 empirical record confirms that technical properties (decentralization, quasi-anonymity) condition the policy space, forcing institutions like the FATF to adapt their strategies, thereby confirming the dialectical relationship.6
The volume's focus on governance failures (operational, financial, or algorithmic) as critical junctures 11 accurately predicted that such events would consistently generate crises of legitimacy, compelling external scrutiny and intervention. These failures demonstrate that the technological ideals of decentralization are always subject to the social and political realities of trust, reputation, and the necessity for stability.4
6.2. Synthesis of Post-2018 Data on Global Governance
The analysis of subsequent developments yields three key synthesized findings regarding the global governance of digital assets:
Reconfigured Control, Not Decentralization: The promise of decentralized governance has largely resulted in the re-articulation of traditional control mechanisms. Governance authority has consolidated around centralized "choke points" (crypto-fiat exchanges) and is increasingly being asserted through state-controlled digital infrastructure (CBDCs). Decentralization, rather than eliminating the state, has merely shifted the boundary where effective regulation can be applied.
The Primacy of Geopolitical Determinism: Regulatory divergence among major powers is no longer driven solely by differing approaches to liberalization versus prohibition. Instead, regulatory decisions are deeply embedded in macro-geopolitical strategy. China’s absolute prohibition secures internal financial sovereignty, while Russia’s controlled integration is a defensive strategy designed to bypass international sanctions, illustrating that national policy is dictated by sovereign protection and external necessity.2
The Financial Inclusion Paradox: The case of El Salvador confirms that the technological efficiency of digital payment rails, while promising low costs, is insufficient to achieve sustainable financial inclusion. When paired with highly volatile assets and lacking complementary governance structures (e.g., consumer protection, financial education), the technology becomes a vector for high-risk speculation rather than a stable service for the financially vulnerable.14
6.3. Recommendations for Policy and Future Academic Research
The evidence suggests that future academic inquiry must shift its focus from the theoretical potential of decentralized technologies to the critical analysis of the concrete governance structures, both domestic and international, that are currently shaping outcomes. Research should rigorously compare the governance risks and unintended consequences of state-led digital adoption (CBDCs) versus truly decentralized systems, focusing on power dynamics and accountability.
For policymakers, the lessons are clear: A cautious, integrated approach is imperative. Policies must be designed to decouple the transactional efficiency of blockchain technology from the inherent volatility of speculative assets if they are to genuinely serve social inclusion goals. This requires implementing robust consumer safeguards, mandating high levels of transparency and accountability for centralized actors (like the Chivo wallet in El Salvador 17), and prioritizing financial stability over technological novelty. The failures of algorithmic governance and the strategic divergence of states demonstrate that the transition "towards a block age or blockages of global governance," as the book’s conclusion posed 5, is yielding outcomes that retain, and in some cases amplify, centralized political control over the digital financial order.
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