A lot of people think crypto is bad. They think it’s bad for the environment, a monumental waste of time and money, rife with fraudulent activity and, perhaps worst of all, they think everyone involved is a massive geek.
But a lot of people also think crypto is good. They see the security, its decentralised aspects and the fact you don’t need anything beyond WiFi to own a crypto wallet as a wholly new and liberating way for money to exist: unregulated, borderless and anonymous. And some people can imagine the benefits of these blockchains, while also seeing the downsides, understanding that it could be great in theory, as opposed to it already presenting a financial utopia. They are the crypto-curious.
Governments are similarly divided, although more specifically about bitcoin than crypto at large. Some nations are all for adopting the currency. Currently, it’s a legal tender in El Salvador and Panama, while Paraguay and Guatemala are seriously looking into mass adoption of bitcoin. But others have banned cryptocurrencies altogether and some are putting strict regulations on the use of bitcoin and other altcoins.
Why the difference of opinion? Control, really. You’ll notice a little trend between the countries who are into crypto adoption (developing countries and those which are relatively dependent on superpower’s economies) and those who dislike it (superpowers or the wealthier countries on their continents).
Those who have power want to keep it. That’s why they’re against a decentralised system coming in that could make their central banks redundant. Those with less authority are looking for the opposite: a change to their economic situation. Adopting a new system offers them the possibility of a fresh start and (a chance) to get ahead of the game.
The whole maintaining economic power thing is the reason why some countries want to ban crypto, but can they actually do it? Technically, yes. In theory, Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China have all already banned all cryptocurrency transactions and/or trading. If you were to look at their, uh… law documents, it would say “crypto: nah” (non-verbatim, obvs). But how far do these bans actually go? Is it really possible to police cryptocurrencies? And if it isn’t, why are these countries even bothering to try?
Firstly, you and your lil’ memeboi wallets are probably sound if you’re waltzing through Morocco on your gap year and happen to have a few dogecoin in your virtual wallet. You’re pretty unlikely to get nicked in this instance, but the stakes are raised a bit if you have bitcoin, as a lot of the laws are specifically about that currency. That being said, it would be best to not log into Binance for a day of trading using a library computer.
But enacting a ban is very different to enforcing one. As with weed, underaged drinking, or using iPlayer without a TV licence, it’s very hard to actually regulate “misuse”. In fact, Morocco banned crypto back in November 2017, but in March 2021, CoinDesk reported that “from November 2017 to February 2021, trading volumes [of bitcoin] on [LocalBitcoins] saw a steep 215 per cent increase” in the country. Meanwhile in Iraq, it has been reported that as much as 1 per cent of the population use crypto. This seems insignificant until you consider that only 10 per cent of the population use traditional banks.
The lack of ability to police crypto is obvious. By design, blockchains allow people to make transactions completely anonymously and without the need for banks. It’s sort of the entire point of them. The anonymous Satoshi Nakamoto developed Bitcoin with the intention of making a trustless cash system, which means you don’t have to trust a third party (ie. a bank) to act as an intermediary between transactions. Basically, it’s a system that allows money to go from A to B, and for people to see the wallets and figures involved, but without revealing stuff like which countries are these people in, specifically who they are and what they’re buying. Trying to keep tabs on a system that’s literally designed to be anonymous makes it very difficult for countries to effectively ban crypto.
In China, the “crypto crackdown”, as it’s been called (because who doesn’t love alliteration), is the most forceful attempt to eradicate crypto in any country right now. Here, the government has made a point of seizing or destroying mining equipment and imposing heavy fines on people caught using crypto. While this did see a big decrease in crypto miners (and coin value) back in May 2021 (at the time, two-thirds of all miners were in China), the number of miners in the world is now back up to “all time high” figures. Some of these miners fled to neighbouring countries, while others moved as far away as Texas and Wyoming, both of which are relatively crypto-friendly states.
Countries that are anti-crypto can make using the coins a little more difficult though. The United States of America doesn’t really seem to know what it thinks about crypto, but they have previously made a point of “tightening up” on how people use crypto in the country. An example of this is when the Treasury Department announced that it would start making it law for any transaction (including withdrawals) over $10,000 to be reported to the IRS (Internal Revenue Service), which is their equivalent of HMRC (Her Majesty’s Revenue and Customs). On paper, the idea was to stop tax evasion.
More recently, an Executive Order (the official fancy way of saying the President has decided to make a part of government focus on something specific) was leaked, which suggested that the USA was accepting how crypto is likely to become more mainstream. Part of this was to look into the idea of a digital equivalent of the US dollar, which would be run by the country’s central bank. This made crypto prices climb across the entire market, as it suggested that the USA both saw benefits to crypto and digital currencies, but that it was also actively looking to retain power within them.
The issue with a country trying to ban cryptocurrencies, or even trying to get people who earn money from them to pay tax, is just that it’s almost impossible to do. Crypto advocates are using it precisely because they don’t trust the government systems, so why would they listen? They see a very clear way to take the power back into their own (crypto) wallets. They’re laughing all the way to the digital bank.