Footage Of Government Trying To Regulate Cryptocurrencies

Footage of government trying to regulate cryptocurrencies

Why are Governments Trying to Regulate Cryptocurrencies?

In the year 2017, Bitcoin hit a record high of $19189.19, according to charts.bitcoin.com, before it started a general downward price trend that only stopped in February 2018. Since then it has experienced a general upward price trend, and it appears it will maintain the trend for some time to come. Other cryptocurrencies such as Ethereum, Bitcoin Cash, Litecoin, and XRP seemed to have followed the same trend, but with price changes that were less steep on average.

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While people didn’t lose some of their investments during the downward price trend that occurred between December 2017 and January 2018, those losses paled in comparison to what BitConnect investors lost during the same period. Unlike the mainstream cryptocurrencies that don’t promise to pay investors any interest for tokens held, BitConnect created what many termed as a pyramid scheme, which ultimately led many people to lose their life savings.

Since then, we have seen more governments and government agencies trying to exercise some control over cryptocurrency exchanges.

Government React to New Technology Instead of Influencing It

Governments are generally slow when it comes to legislating on new technology, thanks to the fact that its employees have well-defined job roles. In most cases, it’s hard for any government employee to take time off what they are officially paid to do, and focus on issues arising out of a new technology.

In most cases, that means that governments only intervene in issues arising out of new technologies after several issues affecting their citizens have been reported.

Footage of government trying to regulate cryptocurrencies

By then the technology is usually advanced to the point that governments have to form new departments to handle issues related to such technologies.

The blockchain technology is obviously following the same trends. So far, the only attempts to bring it to a halt were in China and South Korea (SK restricted new account creation for a few weeks, but have now allowed them), where national government ordered the shutdown of local cryptocurrency exchanges.

Elsewhere in the United States and United Kingdom, BitConnect received orders to cease and desist trading its cryptocurrency after claims that investors had lost their life saving as their Ponzi scheme started falling apart.

Footage of government trying to regulate cryptocurrencies

Overall, it’s clear that government involvement was more of a reaction to cryptocurrency and blockchain technology, rather than an influence in its gradual growth and development.

Top Reasons For Government Involvement in Cryptocurrency Technology

Fraud

In many cases, governments choose to get involved in new technologies when those technologies defraud its citizens. A case in point is on issues such as online gambling.

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While such operations can easily go unnoticed, businesses operating them often find themselves the subject of government investigation. As you would expect, it happens when a player reports it as a crime after losing significant amounts while gambling.

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When investigators are unable to bring those culpable to book, the next step is usually for the government to make it illegal to participate in such a business. While BitConnect and other similar cases may seem like an exception, it will be used as grounds for government involvement in how their citizen participates in Cryptocurrency trade.

Revenue

Most governments generate revenue by taxing individuals and businesses.

Why are Governments Trying to Regulate Cryptocurrencies?

Their work is made easier by the fact that people are legally required to bank their income when it exceeds a certain amount and report any earnings. Furthermore, use of banking services makes it easy to recover forcefully unpaid taxes.

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The use of blockchain technology will mean that the governments will have little control over earnings that haven’t been cashed.

If more people choose to use cryptocurrencies, it could easily make it hard for the government to achieve their revenues targets and could lead to the collapse of the mainstream banking industry. With that in mind, governments will try to find a way to gain control over the way cryptocurrency funds are cashed out.

Although that would still lock them out from access cryptocurrency funds that haven’t been cashed out, which will make the blockchain become some sort of tax-haven.

Fiat Money

Fiat Money is the currency that governments issues as legal tender without backing it with any asset.

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The government uses its authority to force people to accept fiat money as a means of payment, and the government itself accepts it as a form of tax remittance. In that manner, it can print more and lend unto itself without having to borrow from anyone. The challenge with that approach is that it often leads to high inflations rates.

When Satoshi first introduced the Bitcoin Cryptocurrency, his aim was to fight such practices.

He created a limited number of Bitcoins, which means that as more wealth is generated and traded using Bitcoins, they will increase in value instead of numbers.

Footage of government trying to regulate cryptocurrencies

That will cushion users from losses occasioned by inflation when governments print fiat money without backing it with assets.

Such poor monetary practices have occurred in Venezuela and Zimbabwe in the recent past, and caused citizens to experience to lose savings overnight.

However, that does not auger well with most government because it could make them more answerable to their citizens who would choose to pay, or not to pay taxes by simply saving their income in the blockchain.

Exporters and most multinational would benefit the most from such practices because their most of their income comes from doing business with international partners, who may choose to pay in cryptocurrency.

Organized Crime and Terrorism

One of the biggest concerns raised has been the likelihood of organized criminals and terror cells using the anonymity offered by the blockchain technology to launder money or transfer funds for use in terror activities.

Such concerns have for example led to a lawsuit where the government sought to be granted access to a cryptocurrency exchange in the US. The government agency that filed the suit wanted to view historical records of how transaction were carried to determine who cashed their funds, and from who did the transactions originate.

Overall, most governments are yet to figure out the full impact of the use of cryptocurrencies.

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Some such as the China have resorted to banning the use of cryptocurrency as they take time to find ways to control it, while other such as Japan, Saudi Arabia, and Russia are trying to create their own cryptocurrencies or simply embracing the blockchain technology. As more people continue to learn about the blockchain technology and accept cryptocurrencies as a means of payment, we expect the technology to receive more government attention.

We hope that you found this article to be informative and insightful.

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We wish you all the best as you embrace the cryptocurrency technologies.

 

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