The Crypto Cat is out of the bag, but can we still see more Chinese-style bans?

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Source: Adobe / AlphonseLeong.Photos “We will likely see further attempts by countries to ban cryptocurrencies.” to bring.”

A regulatory calculation is coming for crypto. As the US and EU align their legislation, other countries like China and Turkey are implementing various bans on the crypto industry, raising questions as to whether others might follow suit. .

There is no doubt that most governments and regulators tend to view cryptoassets more as a negative than a positive, but will a significant number of them actually go down the China path and ban completely crypto? While commentators to Cryptonews.com agree that many countries can introduce fairly strict regulations sooner or later, most will comfortably stop before outright bans.

Indeed, many analysts suspect that once the crypto market matures and new regulations are introduced, the threat of actual bans will increasingly diminish. And at the same time, governments will understand that a regulated crypto market will be a net positive for the nations they rule.

Internet ban

For Nick Du Cros, head of compliance and regulatory affairs at large European digital asset investment firm CoinShares, it’s probably only a matter of time before we see Bitcoin (BTC) and crypto bans in other countries. Especially when it comes to more authoritarian governments.

“Yes, we will likely see further attempts by countries to ban cryptocurrencies, especially when cryptocurrencies are seen as a threat to state control. For example, where cryptocurrency can be used to bypass capital controls, or where dissidents can be funded despite being cut off from their local banking network, ”he told Cryptonews.com.

This fits with the bill in Turkey, for example, where the government banned crypto payments, largely because locals flocked to BTC (as well as gold and foreign currencies) after the collapse of the value of Turkish lira. And for Kevin Werbach, professor of legal studies and business ethics at the Wharton School in Pennsylvania, such prohibitions exist right now and are not just a distant future possibility.

However, some observers suggest that we shouldn’t be too discouraged by the current situation and that while many countries may introduce regulations, they are unlikely to go so far as to ban crypto.

“I think there is a big gap between the ban on all cryptocurrency-related mining and trading activities, in the case of China, and the steps other countries might take to restrict or less regulate the crypto economy. As is obvious to anyone who understands open blockchain networks, truly banning them would also mean banning the internet, ”said Kristin Smith, Executive Director of the Blockchain Association.

Indeed, there are already signs that at least some countries will take a more balanced approach.

Officials from the U.S. Federal Reserve and the Securities and Exchange Commission, for example, recently publicly stated that the United States will not follow China in banning crypto. However, SEC Chairman Gary Gensler stressed that any decision like China to marginalize crypto in favor of creating a clear race for the digital dollar “would be up to Congress.”

Meanwhile, an ever-growing number of nations (and some U.S. states), from El Salvador to Ukraine and Cuba, have recently passed legislation that takes a favorable stance on Bitcoin and crypto.

Different motivations

Of course, not all nations or jurisdictions are in a position to take a positive approach to cryptoassets. Some have concerns that appear to be directly affected by crypto, and therefore may act in various ways.

“The motivations put forward by governments are numerous. For example, to stop criminal activity, protect investors from price volatility, reduce competition with a state-backed CBDC, prevent ransomware (etc.), ”said Nick Du Cros.

He added that different countries will therefore impose different restrictions on crypto.

“We’re going to see different countries take different approaches. For example, today Russia announced some sort of ban trying to push crypto activity outside of Russia, ”he said.

Likewise, Kevin Werbach cites the desire to fight illegal activities as the main driving force of governments. This can be seen as an encouraging sign for the industry, as it can be argued that a need to eliminate bad actors would point more towards regulation than outright ban.

“The main concerns motivating significant restrictions on cryptocurrencies are fraud, criminal activities such as money laundering and tax evasion or capital controls. Many of the so-called “bans” are more bans on trade, as they fall outside the existing regulatory framework for financial services, or restrictions on interactions with the banking system, ”he said.

That said, Nick Du Cros recalls that criminal activity involving cryptocurrencies may not be as widespread as some suggest, and that such activity could be used as an excuse by jealous governments to eradicate or severely restrict crypto.

“When you look behind the politically motivated headlines, you can see the FUD (fear, uncertainty and doubt) spreading. For example, the prominent blockchain forensics firm Chainalysis, estimated that criminal activity accounted for only 0.34% of cryptocurrency transactions in 2020, ”he said.

Indeed, Kristin Smith suggests that the main driver of the current push to regulate (or ban) may simply be a government desire to maintain a monopoly hold on the financial system.

“If we take the example of China, it would probably be about maintaining tight state control of the financial system and stifling any non-governmental attempts to cultivate new financial networks,” she said.

The impossibility of general prohibitions

While we may see a trend towards harsh measures in the coming months, most observers are more positive about the future.

“As regulations develop to address legitimate concerns about cryptocurrency markets, bans will become less common,” said Kevin Werbach.

Likewise, Kristin Smith suspects that as time passes and cryptoassets gain success without jeopardizing the financial system, governments will increasingly adopt a favorable view of crypto.

“Our hope is that other countries realize the benefits that these crypto networks can offer their citizens and will embrace these networks, rather than trying to resist them,” she explained.

At the same time, it can be argued that most governments will have no choice but to embrace crypto, as outright bans are potentially unworkable and unenforceable.

“The cat is out of the bag and one of the nice things about a decentralized model is that it can’t be controlled by the government,” said Charlie Silver, CEO of Permission.io.

Kevin Werbach suggests that, even in China, the current crypto ban will not be fully effective, citing the use of VPNs (bypassing the country’s “great firewall”) as an example of how legal statements are not always fully implemented.

“There is no doubt that Chinese users were trading in violation of the 2017 ban on fiat-to-crypto exchanges before now. We have to see how serious the effort will be to stop this kind of activity, ”he said.

It is because of this difficulty that most commentators expect that ultimately the vast majority of democratic nations will enforce regulations rather than prohibitions. And in theory, it could be a victory for crypto, nations and for governments ._____ Read more: – Response to Ray Dalio: Banning Bitcoin is a “mole game” – Here are the ways whose governments could attack Bitcoin – and none of them seem hot

– Chinese crypto ban could provide long-term benefits for Bitcoin – BitGo CEO – a16z presents regulatory proposal as SEC chief focuses on consumer protection

– India to Regulate Crypto Like Ban Talk Binned – Report – Turkey Prepares Crypto Regulation Amid ‘Disruptive’ Money Outflow

– Putin says crypto is “not worthless” and has “a right to exist” – Regulator is like a “bulldozer” but crypto is “resistant to state control”

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