How Governments Are Dealing with Cryptocurrencies?


Digital currencies had arisen back in 2008, with the appearance of bitcoin and since then the industry managed to develop tremendously.

Bitcoin trading had encouraged new digital currencies to take form, as the idea of a decentralized monetary system, not influenced by central banks or any other central authority sound pretty appealing.

However, one problem emerged because of that matter. Since cryptocurrencies are created by private entities, then there is no regulation in place for them, which is why government attention had been on this new digital currencies in the last two year.

Alt text: governments and cryptocurrencies


Some governments are not in favor of digital coins

To sustain that assumption we’ll describe two situations that took place recently and had a negative impact on the price of cryptocurrencies, as a whole. First, China banned Initial Coin Offerings and public authorities claimed that ICOs are “seriously disrupting the economic and financial order”. That was a serious bad news when it comes to bitcoin trading, since the price dropped around 10% following the official report. Ethereum and Litecoin had been also hurt by the event, losing 21.74% and 24.92%, respectively.

The action from the Chinese government came two months after the US Securities and Exchange Commission, or SEC, ruled that cryptocurrency IPOs are investments and therefore, should be subject to the same rules as any regular stock. Also, the Russian government opened a criminal investigation involving bitcoin trading and Venezuelan government is jailing bitcoin miners.

Some officials consider using blockchain technology

Sweden is a positive example in that direction. Cash use is at all-time lows, due to the fact that mobile payments are easy to use. Since cash is not used anymore, the central government is wondering why the cash should be kept. The blockchain technology managed to get their attention and a central bank backed cryptocurrency could be a future solution for that matter.

To sum up, cryptocurrencies had gaining popularity, but the way government approach this new idea of money is different from place to place. You should carefully consider how you use them, in order to avoid being trapped in an investigation.