MENU
FOLLOW
SEARCH
Technologies & InnovationsFind Best Solution

Why regulators ban cryptocurrencies and what it leads to

Blockchain technology continues to thrive in countries where government agencies are actively working to determine the legal status of cryptocurrencies. Crypto-friendly countries include most developed countries, including the US and several in the EU.
Why regulators ban cryptocurrencies and what it leads to
Why regulators ban cryptocurrencies and what it leads to
New laws have been enacted in response to the growing crypto industry
New laws have been enacted in response to the growing crypto industry
A complete ban on cryptocurrencies makes the IT industry uncompetitive
A complete ban on cryptocurrencies makes the IT industry uncompetitive
Infrastructure development will change the situation
Infrastructure development will change the situation
Crypto policy is drawing a new world map
New laws and regulations have been enacted in response to the growing support for the cryptocurrency industry. In early May, California Governor Gavin Newsom signed an executive order to establish a framework for the state's support and regulation of cryptocurrencies.

The current crisis underscores the need to end ongoing speculation about the status of cryptocurrencies. Blockchain must be legalized, taxed, and regulated. This is a unique opportunity to develop a new industry that will lead to new startups/services, solve the problem of cybercrime, help transform business processes, save jobs and entire companies, and much more.

Legislation is still pending in many countries, and there are still countries with a crypto vacuum. However, most regulators have taken a stand on crypto assets and have put regulatory or prohibition measures in place. The world map is already divided into blockchain-friendly and blockchain-unfriendly countries.
What a ban on cryptocurrencies will lead to
Financial authorities have an obligation to regulate any type of asset to protect citizens. Some regulators choose the path of outright prohibition, which prevents opportunities for the development of legal blockchain fintech projects. At the same time, a complete ban doesn’t imply the development of tools for traceability and cannot stop unscrupulous users. Prohibition of cryptocurrencies will inevitably slow down the development of blockchain and fintech.

In the case of digital assets, governments know that a complete ban is virtually impossible. Given the globalization of the economy and the distributed ledger technology on which cryptocurrencies are based, a complete ban would lead to an exodus of investment and professionals from the country, making the IT industry uncompetitive. In addition, blockchain companies that could have become taxpayers with favorable legislation will leave jurisdictions that are hostile to cryptocurrencies. The desire to compartmentalize the technology has always led to it simply developing in a different area.
New laws have been enacted in response to the growing crypto industry
New laws have been enacted in response to the growing crypto industry
A complete ban on cryptocurrencies makes the IT industry uncompetitive
A complete ban on cryptocurrencies makes the IT industry uncompetitive
Infrastructure development will change the situation
Infrastructure development will change the situation
Why regulators ban cryptocurrencies
There are some reasons why countries choose to ban cryptocurrencies. One of the main motives for the bans is the regulators’ fear of insufficient control of the crypto industry. The regulator's role is to ensure financial stability. For example, in developing countries, bans have protected people from making imprudent investments in credit funds and from mass frauds indirectly related to cryptocurrencies. On the other hand, inflation and a lack of financial tools for the public may change the way regulators view crypto assets.

Another reason for bans has to do with mining and increased electricity consumption. In countries with electricity shortages, mining can be a problem and regulators might simply ban this type of activity. Illegal use of electricity can lead to heavy fines. However, the development of green energy and new blockchain algorithms could free the crypto industry from this problem.

Regardless, the ban on cryptocurrencies in China is worth considering. Here, the main reason for the ban was centralized government regulation in the blockchain space and the introduction of a central bank digital currency.

Now the wave of bans is over, and the crypto industry is developing a digital and legal infrastructure. Licensed exchanges, stores accepting cryptocurrencies, legal protection, and security are expanding and making the crypto industry more convenient for everyday use.

It’s likely that countries that have banned crypto assets will allow their use once the blockchain industry proves its effectiveness in practice and lawmakers in developed countries develop a solid legal framework. The transition to a new financial system will occur when regulators around the world find common ground.
FCE GROUP AG Platz 4, 6039 Root D4, Switzerland
Send us email
Contact Us
Send us email