Can the Most Powerful Countries Afford to Ban Crypto?

Here is why it’s not easy for countries to ban the crypto

There have been rumblings about a global Bitcoin prohibition ever since the cryptocurrency’s infancy. Bitcoin, for example, is widely seen as a danger to established monetary systems because of its potential to disrupt central banks’ hegemony over the money supply.

Moreover, some people think Bitcoin’s pseudo-anonymity makes it a good tool for illegal activities, including drug dealing, money laundering, and ransomware. However, the ability of local governments to outright ban Bitcoin varies widely.

In some nations, Bitcoin is already illegal.

Many countries have taken the step of outright banning Bitcoin. Therefore, the answer to the question of whether or not it can be prohibited is yes.

To this day, only a small number of nations have implemented complete bans on Bitcoin, making any kind of contact with, ownership of, or use of the cryptocurrency illegal. Included in this group are the nations of Algeria, Ecuador, Egypt, Nepal, and Pakistan.

Many other countries, notably Saudi Arabia and Taiwan, have implemented partial bans on Bitcoin, making it illegal for banks to engage in Bitcoin-related business or facilitate Bitcoin transactions.

The majority of countries that have put limits on Bitcoin use or outright outlawed it are also among the least democratic in the world, according to The Economist’s Democracy Index.

Enforcement measures in China against Bitcoin

China has made some of the most drastic Bitcoin-related actions in 2021. China has pushed down on cryptocurrency mining and crypto-related businesses to achieve carbon neutrality and, as some experts have noted, to prepare for the debut of the digital yuan, a rival to Bitcoin.

The People’s Bank of China (PBoC) issued an edict to banks and payment platforms in 2021, instructing them to discontinue cryptocurrency activities. In the same year, China ordered cryptocurrency miners to shut down their operations and migrate outside of the country.

China held two-thirds of Bitcoin mining before the crackdown. After that, many miners left the industry, and cryptocurrency exchanges like Huobi and OKEx stopped serving consumers from China. Major social media platforms, Weibo, restricted even individual crypto-related profiles.

However, the prohibition has only had a limited effect. Despite China’s greatest efforts to clamp down on the crypto business, people living in the country can still access crypto exchanges abroad by utilising virtual private networks (VPNs) (VPNs).

Could the U.S. ban Bitcoin?

Bitcoin is currently accepted legally throughout the U.S. Despite claims contrary to the Securities and Exchange Commission (SEC), the CFTC determined in 2015 that bitcoin is a commodity similar to gold and hence subject to its laws.

The Financial Crimes Enforcement Network (FinCEN) of the United States Treasury Department issued recommendations in 2013 saying it is permissible to invest in Bitcoin and other cryptocurrencies. Is there any thought given to outlawing Bitcoin in the U.S.? If the vendor accepts it as payment, use it as payment.

Due to the heterogeneity of state and federal laws in the United States, Bitcoin regulation varies from one state to the next. For instance, businesses in Hawaii dealing with Bitcoin and cryptocurrencies must apply for a money transmitter licence, while digital currencies have the same legal status as money in Wyoming.

In light of the preceding, it is unlikely that Bitcoin will be outright banned in the United States. Indeed, American companies have invested billions in Bitcoin, and yet the question of when the United States will launch its first Bitcoin ETF or exchange-traded fund is still hotly debated.

No sign that the U.S. will outlaw Bitcoin or other cryptocurrencies., but it is possible that strict regulatory requirements could be imposed on the entry and exit points to the Bitcoin ecosystem, making it extremely difficult to obtain and use Bitcoin without actually outlawing it. But doing so may have severe financial consequences.

#1. Bitcoin is already too integrated into the U.S. financial system for it to be outlawed.

Bitcoin’s cultural and technological permeation into the U.S. banking system makes a prohibition unlikely. It would eliminate organisations responsible for managing billions of dollars in assets, thousands of jobs lost, the export of innovation, and the growth of a criminal market for Bitcoin.

#2. Compliance with a prohibition is unlikely.

While it is obvious that a government might issue an order prohibiting Bitcoin, it would be extremely challenging, if not impossible, to actually enforce such an order in many nations. Individuals could easily download Bitcoin wallet software, run a node, and conduct transactions unless the government imposed stringent control over the Internet.

Let me know your thoughts

Don’t hesitate to follow me :)