Inside The World’s Anti-Crypto Countries

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Understanding Cryptocurrency Regulatory Trends

During the last couple of years,
cryptocurrency regulation has been a subject on the agenda of most governments
throughout the world. However, the regulatory approach varies widely from
country to country, as some have chosen to adopt a crypto-friendly regulation,
whereas others have outright banned the technology. In this article, we’ll take you
on a journey into the world’s anti-crypto countries, to better understand the
legality of digital currencies, current trends, and the general reasoning for
crypto bans.

The crypto-friendly regulatory trend

To kick things off, there are
numerous voices in the cryptocurrency industry advocating for a regulatory
framework, while others think that regulation would only stump the digital
currency revolution. Crypto regulation isn’t that bad if it’s friendly and its purpose is to protect investors and facilitate the growth of the market. This is happening in countries like Switzerland, Denmark, and Malta. For instance, the Swiss Financial Market Supervisory Authority has released a set of guidelines that start-ups can utilize to launch ICOs that are less-risky to investors, but which also abide by the Swiss laws. In Denmark, the National Bank has decided to not recognize digital currencies as legal tender, which means that the country now has a 0% tax on crypto-based profits, thus making it highly-attractive for investors. Malta is also encouraging blockchain innovation through crypto-friendly regulatory efforts – in fact, the country’s Prime Minister has recently told the United Nations assembly that crypto is ‘the inevitable future of money’.

So, why discourage crypto growth?

The answer to this question is fairly complex, as a world where crypto has been mass-adopted would be quite different from what we’re used to. At this time, traditional currencies represent one of the most powerful tools that governments have and can utilize to control the world. Through monetary policies, governments can create or destroy money, control inflation, generate jobs, stimulate investments, track currencies, control the rate of consumption and more. As you may already know, most coins are decentralized, peer-to-peer currencies with no issuer, no central authority and no middleman. Therefore, mass adoption means that governments will eventually lose this control. However, there are several other effects as well.

Firstly, you can’t tax crypto if
it isn’t exchanged to fiat. Due to the semi-anonymous status of most coins,
there is no way to tell how much money a person has, and what they do with it.
As countries get most of their income from tax, they’re actively brainstorming
new taxing methods that would be immune to the digital currency revolution. Of
course, taxes are still important for the well-being of society, as the funds
can be used by governments to improve the quality of life of their citizens.

Secondly, governments have to
play their role in limiting criminal activity. Illegal financing is much easier
to attain via digital currencies when compared to traditional payment methods, so
citizen protection would be harder to guarantee.

Lastly, banks are also in danger,
granted that their entire purpose is based on fiat currencies. With P2P payment
systems like bitcoin, banks won’t be able to charge high taxes and commissions
anymore, thus leading to their eventual demise.

However, there is a
crypto-friendly answer to each of these issues. Value-added tax (VAT) on
products can reduce the financial impact of crypto adoption on governments and
society. Criminal activity can be limited through the growing blockchain
analysis services, and banks can reshape their financial services (loans,
mortgages, investments, accounts) to be crypto-friendly.

Can cryptocurrencies be banned?

Well, the answer to this question
is relative. Crypto bans concerning organizations and businesses are quite
effective, granted that governments can easily control the activity of these
entities. With this in mind, you can’t set up a crypto exchange in China, but
you can always keep and use the coins for yourself. However, the crypto market is
quite safe, granted that it would be very difficult to ban and completely
control what citizens do on the internet. You can forbid crypto-to-fiat
conversions, thus making it difficult for users to get access to fiat
currencies if they’re crypto fans – however, you can’t stop them from using
crypto directly for a variety of P2P purchases. Additionally, you can’t stop
P2P exchanges happening face-to-face

In the worst case scenario, a government looking to limit the use of digital currencies could blacklist all crypto-related websites, thus initiating a censorship of the internet. Even so, you cannot stop people from using a coin free of third party services, unless you reserve the right to conduct inspections into the people’s private matters. With this in mind, a worldwide digital currency ban would be difficult to attain and would most likely result in a new dystopia, hence why many countries are taking progressive steps in terms of their crypto legislation.

As this article is part of a series, we will soon conduct several case studies, looking to outline the current status of the market, in countries that have identified themselves as anti-crypto.

Featured Image via BigStock.

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