Booming cryptos are creating fortunes for some, but headaches for others.
China falls into the latter.
They have since recovered, but now it’s not just China who’s banning digital tokens. South Korea has banned initial coin offerings (ICOs). And according to The Washington Post, at least 13 other countries want to impose rules or tighten existing regulation.
‘Last week, European Central Bank Governing Council member Ewald Nowotny said the bank is discussing “concrete legal restrictions” on digital coin sales.’
Russia to Ban Cryptos?
Even Russia’s President Vladimir Putin, wants to regulate cryptos. He believes digital tokens pose ‘serious risks’ as they can be used for money laundering or tax evasion.
Russia’s finance minister, Anton Siluanov believes bitcoin and other tokens should be treated as if they were securities. That way Russia could regulate and on occasion, control cryptocurrencies in their homeland.
Russia’s central bank first deputy governor, Segey Shvetsov went as far to say cryptos were a pyramid scheme.
But regulating what has now become a movement won’t be easy to do. The Post continues:
‘…Since it (bitcoin) works on a peer-to-peer network, users can buy and sell coins and secure and perpetuate the system without any government or central bank involvement. Trying to control it is “like trying to catch water,” said Alex Tapscott, chief executive of NextBlock Global, a venture-capital firm that invests in blockchain startups.’
According to Roger Ver, an early investor in bitcoin and somewhat of a crypto prophet, as bitcoin gains wider acceptance, it will easily undermine those wishing to control it:
‘The invention of bitcoin is one of the most liberating technologies in all of human history. It is on par with the importance of the invention of the printing press, or the internet itself.’
I’d have to agree with Roger, I believe many of these bans could be just temporary. It scares China that households are selling yuan to buy bitcoin.
But their ban is doing little to stop this from happening. Already the Chinese are moving their capital to Hong Kong where exchanges still operate and bans don’t apply.
I believe it will be the testing ground for cryptos in China. And if the industry flourishes, you can bet China might lift their bans and impose controls instead.
What’s the point of banning cryptos if it does little to stop people buying them? Surely they’d rather try to impose exchange restrictions, like a daily buying limit, or heavily tax exchanges instead. While capital would still be flying into bitcoin, it would at least allow them to keep an eye on it.
Junior Analyst, Money Morning
PS: if you want to know more about bitcoin before bans are lifted and it gains mass adoption, click here.