The West May Face a Monetary Trust Breakdown, Says Balaji Srinivasan

Balaji Srinivasan, former CTO of Coinbase and influential investor in the crypto ecosystem, claims that Western governments will eventually launch massive asset seizure campaigns. This will happen as a sovereign debt crisis approaches. He foresees a time when the State will seek new means since the bill is increasing and the option “carry on as before” is closing. And in the same breath, the implicit message is clear: Bitcoin becomes an exit option again, or at least a plan B, when confidence in the fiat system cracks.

The Debt Crisis as a Backdrop, Not Just a Mere Setting

When debt becomes structural, fiscal policy changes. Certain taxes increase, “exceptional” taxes are created, and the rules of the game change mid-play. And when that is not enough, the vocabulary hardens.

In this context, Bitcoin is used as a confidence thermometer. When savers think the rules may change quickly, they seek assets that are harder to immobilize. Not necessarily to “flee.” Sometimes just to breathe.

International institutions have been monitoring the rise of public debt in major advanced economies for years. On the International Monetary Fund’s data tool, the gross debt of US government administrations is displayed at very high levels as a percentage of GDP in recent projections.

At this stage, it’s not about saying that seizure is “inevitable” in the legal sense. It is rather a matter of trajectory. The heavier the debt, the more inventive governments become.

What Srinivasan highlights is an expanded notion of seizure. He is not only talking about a State arriving to “take” a property. Balaji also stresses more diffuse forms, like inflation, which erodes wealth without a notice of levy. In a long discussion, he even sums up the logic this way: seizure can come “by inflation” or “by direct taking.” On the other hand, bitcoin can be held without a bank, provided one assumes its custody.

The Historical Precedent That Maximalists Wave: Gold, Then Bitcoin

When talking about seizure, the story of gold always comes back to the table. In 1933, Franklin D. Roosevelt signed Executive Order 6102. Indeed, it restricted gold ownership and imposed a surrender to the State beyond certain thresholds, in a banking crisis context. That’s where bitcoin enters the narrative as a “hard asset” and as infrastructure.

For Balaji’s supporters, bitcoin is not just an investment. It is an individual sovereignty tool, provided you master its custody and limit intermediaries. The nuance is important. In fact, holding bitcoin via a platform is not the same as holding it actually.

Balaji mentions the risk that a highly centralized universe makes assets easy to freeze, scan, and move against the holder’s will. He cites, for example, dependencies on platforms and software updates, with the fear that a State injunction becomes technically enforceable.

There remains the less comfortable part, the one forgotten when the market is euphoric. Bitcoin does not eliminate political risk, it shifts it. Taxation, reporting obligations, pressure on entry and exit points, all of this already exists to varying degrees. The “exit” is therefore a strategy, not a magic wand. And in an overindebted world, rules move fast, sometimes silently, sometimes with a big speech on television.