Arguing that governments can’t shut down Bitcoin is off the mark

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Key Takeaways The Chairman of the US Banking Committee has suggested a ban on all cryptocurrencies Many claim that crypto is immune to government shutdowns, but this is only true directly By attacking the ecosystem and the ability to access it, crypto can be significantly curtailed by lawmakers

Bitcoin cannot be stopped, the saying goes. But that misses the point.

First, let me be clear and affirm that this mantra is true, at least technically. Bitcoin exists on the internet and is therefore immune to shutdown. Unless, of course, you shut down the internet somehow. But for all intents and purposes, Bitcoin is decentralized and exists in the online world, a technological feat that makes it resistant to restrictions.

Bitcoin cannot be stopped directly, but indirectly, that’s another story

But while a direct blockchain shutdown is impossible, governments can, at least theoretically, seriously undermine Bitcoin and limit its adoption by the masses. This might not technically qualify as shutting it down, and I am not commenting on the likelihood of that happening, but there is no doubt that if a sufficiently concerted effort is made, an assault by lawmakers on Bitcoin could be devastating.

Just look at the prevalence of centralized entities in space. While Bitcoin itself is decentralized, for the masses to access it, the vast majority goes through centralized companies such as Binance or other exchanges. And what if governments go after these companies?

These companies will be obliged to respect the laws. Of course, decentralized exchanges (DEXs) will remain and, like Bitcoin itself, resist the direct shutdown. But would you expect Bitcoin to achieve mainstream success and continue to become a legitimate financial asset if DEXs were the only option?

Not only would institutions be reluctant to go down this path, but they could also simply be prohibited from holding it.

US Banking Committee Chairman Suggests Banning Cryptocurrencies

I am writing this article now in the wake of the story that has emerged regarding US Banking Committee Chairman Sherrod Brown suggesting a cryptocurrency ban.

Brown said:

“I have already gone to the Treasury and the Secretary and asked for a government-wide assessment through all the various regulatory bodies. … The SEC has been particularly aggressive, and we need to move forward on that and legislatively if we come to that.

It’s been scoffed at in some quarters, but it’s worth paying attention to. The United States is the financial capital of the world. If the SEC came out and banned it, it would have a seismic impact.

Think about the part of the market that might be banned from holding Bitcoin – institutions, pension funds, public companies, etc. Or to all the infrastructure that would be demolished, such as stock exchanges.

On the other hand, it remains a remote possibility. And going back to my earlier point about how people overlook the potential of governments to shut down Bitcoin, Brown acknowledged that “We want them to do what they need to do at the same time, maybe l ban, although banning it would be very difficult because it would go overseas, and who knows how that would work.

Final Thoughts

I don’t predict any sort of demise for Bitcoin or crypto as a result of this. I just think too many people ignore how detrimental governments can be to the biggest cryptocurrency in the world.

Of course, the beauty of blockchain is that it cannot be shut down directly. But indirectly? It’s a different story. Governments have too much power to be considered “irrelevant” when it comes to Bitcoin.

So far, there is no evidence that countries like the United States will take such drastic measures to ban crypto. But after a torrid 2022 that has seen scandal after scandal rock the space, comments like Sherrod Brown’s come as no surprise.

In the remote possibility that these words were ever put into action, it would be foolish for investors to view them as a benign development for crypto.

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