Every year we see regulators increasing the pressure on crypto.
This is done not only to protect investors, but also simply because crypto creates risks for the traditional financial system.
So why will regulators in various countries continue to tighten the screws?
– Negative impact on central banks
In a traditional system, central banks control when and how to print money. They also regulate the distribution of money and can impose various restrictions.
Whereas Bitcoin is a decentralized system where everyone is equal and can make exchanges without centralized intermediaries. And the “printing” of new coins is controlled by an algorithm rather than a small group of people.
People trust this system more, which reduces the credibility of central banks.
– Bypassing government capital controls
Many countries severely restrict capital outflows abroad in critical situations to reduce the depreciation of the nation’s currency.
This is not a problem for cryptocurrencies because no one can stop users from sending money anywhere in the world via crypto.
For example, in 2020, Chinese citizens could only withdraw $50,000 a year abroad. But some Chinese investors got around this restriction with cryptocurrencies (BTC/USDT) and took out at least $50 billion in 12 months.
– Difficult to track and tax
Even though all transactions and wallets are in the public domain, it’s difficult for regulators to track who is behind a particular wallet. This is exacerbated by mixers and anonymous cryptocurrencies.
Therefore, it is easy for some users to evade taxes by using cryptocurrencies.
🙅♂️ But not all countries hate crypto
For some, crypto is a problem; for others, it’s an opportunity. Developing countries see more pros than cons in cryptocurrencies.
For example, El Salvador and the Central African Republic (CAR) have adopted Bitcoin as a state currency to strengthen their economies because they rely heavily on remittances from abroad and people have little access to financial services. Some countries also use crypto to circumvent sanctions.
