China was the first country to make headlines after banning Bitcoin. However, this is not the only country that has outlawed Bitcoin. So far, many other jurisdictions have severely restricted or banned virtual currencies outright over the last few years.
Iraq, Egypt, Oman, Qatar, Algeria, Bangladesh, and Tunisia have also banned Bitcoin. Over 40 other countries, including Bolivia and Bahrain, have implicitly banned virtual currencies by implementing restrictions on conventional banks to ensure they don’t deal with them. Some countries prohibit crypto exchanges from operating within their jurisdiction.
But even with different jurisdictions and countries banning virtual currencies, people continue trading them on various crypto exchanges. You can follow this link , which allows people to register and start trading Bitcoin from different parts of the world. What’s more, such platforms accept various payment methods, enabling users to transact seamlessly.
Why Are Governments Banning Bitcoin and Other Digital Currencies?
Currently, the crypto sector is among the fastest-growing markets for investors. That’s because first-time and traditional investors are looking for alternative and high-yield investments. Perhaps, that’s because actual interest rates for conventional assets have dropped over the years. Bitcoin and other electronic currencies have proved to be attractive alternatives for most investors.
Many people and businesses also take advantage of price swings to trade Bitcoin for profits. But, amid the rapid growth in the crypto sector, governments worldwide are looking for ways to regulate Bitcoin and other virtual currencies. And this prompts many people to wonder why governments and reserve banks are apprehensive about the increasing crypto adoption.
Here’s why some governments are against Bitcoin:
- Bitcoin’s value: Satoshi Nakamoto designed Bitcoin to work as an exchange medium using cryptography. Therefore, no country, bank, or central authority issues Bitcoin. Also, no sovereign guarantee or asset backs Bitcoin. Additionally, confining Bitcoin’s flow within a specific geographical location is not easy. For this reason, most governments can’t explain what gives this and other virtual currencies value.
- Monetary sovereignty: The central banks of different countries play a vital role in the money flow in their economies. Ideally, central banks use monetary policies and controls to balance inflation and economic growth. Since Bitcoin is decentralized, its adoption means central banks will lose control over monetary policies. Thus, governments will no longer manage or regulate the money supply, meaning they would lose countries could even lose their financial sovereignty.
- Terror financing and money laundering: Censorship-resistant and pseudo-anonymity are prominent traits of Bitcoin and other virtual currencies. Ideally, criminals can quickly use Bitcoin to finance terrorism or launder money. Since not all law enforcement and government agencies know about Bitcoin, criminals can take advantage of this to transact with Bitcoin.
- Funds flow between countries: Bitcoin is hot money because it’s easy to flow in and out of a nation. Therefore, people can quickly transact with Bitcoin outside their borders, leaving their governments in a financial crisis.
- Tax evasion: Many people use Bitcoin for tax evasion purposes, and that’s a primary concern for most governments. Ideally, Bitcoin can shield investors’ income from the taxman. That way, Bitcoin can create a tax gap, leading to significant losses for governments.
These are the primary reasons governments fear and subsequently ban or restrict Bitcoin and other digital currencies. However, some people suggest regulation rather than outright bans. Regulatory bodies can develop ways of controlling Bitcoin transactions within country borders and even internationally. Nevertheless, Bitcoin’s decentralization makes its control and regulation difficult. Also, the absence of third parties like banks makes gathering information about Bitcoin and other virtual currencies difficult for governments.
