Governments Against The Rise Of Cryptocurrencies

Bitcoin and other cryptocurrencies are on fire and everybody knows that. 2021 serves as a fortune teller for cryptocurrencies in the way that the rise of these assets is unstoppable. As well as their prices, their market cap has also performed very well and continues to increase. However, this sparkle has disturbed the centralized systems. Without regulation and taxation, governments could not benefit from the increase of Bitcoin and others and they still could not find a way to open a space in the decentralized systems for themselves. Government intervention will damage the free market story told by capitalism for years and years and what these regulatory organs try is to take a position considering the future of the market as a whole. 

If we look at how central banks have positioned themselves against the developments. some might say it is all defensive. Central banks and governments realized that they should maintain their power to control currency and money supply before putting in a claim for what Bitcoin has achieved during the years.  

Can you guess which country is the most proactive one in the fight? The answer is anything but China. People’s Bank of China is trying to implement a digital yuan, linked up to the global transaction systems and payment options. The idea behind central bank digital currency is that it is not related to any regular bank like conventional electronic money or debts on credit cards. It represents cash created by the state and is kept in the citizen’s electronic wallet.

Many people claim that the trials of digital currencies are actually useless since this method does not limit the actions that can be taken with Bitcoin. Indeed, a digital currency can be the alternative to printed money, but not to Blockchain technology. There is a big loophole in the legal systems which cannot find any legitimate reason to prevent the free circulation of Bitcoin. 

The least developed and developing countries have found a solution that is definitely against the principles of the free market: prohibiting all deals of cryptocurrencies. Nigeria has had a trading volume of $500 million only in Bitcoin in the last five years as the second largest Bitcoin market after the US. The reason for that kind of rise was the unstable monetary policies of the Nigerian government. What makes people trade in Bitcoin is the incompetency of the government. Thus, governments should focus on how they can create a safer financial environment for their citizens instead of banning all the trading accounts involved in cryptocurrency activities. 

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Marcus Arat

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