There is no way the US is allowing Taiwan to simply make BTC legal tender. Either the proposal will have some major caveats to it in form of extreme KYC and AML censorship and surveillance, or it will simply not pass.

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In combination with the same policies in the US it could bring down the CCP to it's knees

Before that can happen, the pro-cooptation faction of the US status quo elite must prevail over the pro-destruction faction. Simplifying grossly: BlackRock and JP Morgan and their politician cronies must prevail over the other banksters and their politician cronies (the SEC, the Fed, the US Treasury, Obama-Biden...)

Yes to the KYC afaik

They'll keep BTC as legal tender for Government and "select individuals" only.