Why do governments prohibit Bitcoin?

Bitcoin and Govermets

The state is a conservative establishment. Its main goal is to ensure its own existence. This determines its attitude to any emerging changes.If innovations do not affect the state system in any way and can be integrated into it, government treats them with loyalty or indifference. In case it might violate any functions of the state or even worse its very existence, new ideas are rejected, blocked and eradicated.

Cryptocurrencies and, more generally, fintech were not at first appreciated, and most countries simply ignored the existence of this technology. It was this way until around 2014, when the capitalization of cryptocurrency market began to grow rapidly. Particularly this was supported by emergence of such tools as ICO.

Then many governments were suddenly interested in the functions and goals of the blockchain and the cryptocurrency ecosystem. But there was no real hurry in their actions. Very often opposite opinions were expressed. We must commend the officials – there were almost no hastily adopted laws. The situation looked harmless and, in the opinion of officials, there was time to sort things out.

2016 and 2017 frightened governments and public administration systems. It became clear that if they let everything go, then the issue of money could get out of control. Therefore, calls for banning and imprisoning those who dare to use this technology were increased.

Criminal offence for cryptocurrency

Crypto Prison

Several countries were not satisfied with the calls and carried out  their threats. These are Nepal, Bolivia, Bangladesh and Algeria. For any transactions with the cryptocurrency and its advertising on the territory of these countries, a penalty of several years of imprisonment is provided. In Venezuela, bitcoin-miners are persecuted for stealing electricity.

Several countries prohibit the trade and storage of digital currencies, and certain types of transactions with them. There are no criminal offence but heavy fines were introduced.

Yet most governments understand that a simple ban cannot resolve the situation that has arisen. Furthermore, the example of countries that have done this shows that investments, taxes and technologies are starting to flow abroad.

China has imposed a total ban on any crypto exchange and the holding of the ICO under their jurisdiction. As a result, the Chinese create forks for known coins and came up with an analogue of the initial offering – the IFO procedure. This allows you to circumvent severe prohibitions. Many investors and technology supporters operate through foreign resources.

Countries with partial prohibitions on crypto technology

Countries

 

 

 

 

This list of countries includes Kyrgyzstan, Ecuador, Iceland, Morocco and Malaysia, Israel, Vietnam, Thailand.

The governments of most economically developed countries are more cautious about regulating cryptocurrency. They agree that it is necessary to develop common standards and a legal framework.
Neutral or loyal to the cryptocurrency countries
The United States, on the one hand, warn their citizens about the risks of investing in digital currencies, on the other hand, they do not want to prevent the development of new technologies.

Canada is the first country in the world to adopt the law on digital currencies. Nevertheless, bitcoin and other cryptocurrencies are not legal tender.

The UK and the EU follow the same approach – to stop the anonymous use of cryptocurrency.

Japan looks the most loyal to the cryptocurrencies of the Asian countries, but it is strictly regulated. The country has adopted a law on virtual currency, which recognized Bitcoin and Etherium as money, as well as official means of payment. On the other hand, cryptocurrency exchanges are required to obtain licenses and to be registered. They are obliged to conduct the KYC / AML procedure for all their clients. From tax perspectives, Japan collects a tax on income from the cryptocurrency, and it is treated as a profit and capital gain.

South Korea dramatically changed its attitude in January 2018. Up to this point, the situation for the finteсh was quite favorable, but then there was a radical shift and they adopted a law that prohibits trading in cryptocurrency using anonymous accounts.

Switzerland is the most open to digital currencies country. Bitcoin and other cryptocurrencies here are are considered an asset for capital gains. Their use is introduced into the everyday life of citizens: in one of the cantons they can pay utility bills. The Minister of Economy said in one statement that the country plans to become the main “crypto-nation”.

Conclusion

G20

 

 

 

 

 

The G20 summit that took place in March referred extensively to cryptocurrencies. The participating countries recognized the existence of the cryptocurrency and the need to create a single regulatory and legal framework for its use.

At the meeting, it was announced that the cryptocurrency does not pose a threat to the global financial system.

This does not mean that the coast is clear. The countries will not miss the opportunity to lead a promising direction, and to receive incomes generated from its investments and taxes.

However, this suggests that the rules of the game will become more clear and understandable.


Related topics:
«I am engaged in cryptocurrencies and I try to hide it from people» – long read from Grigory Maltsev, COO FinTab, where he communicates with crypto enthusiasts and learns why in Russia it is easy to go to jail if you are a cryptocurrency holder.

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