Does the State Need to Prohibit Cryptocurrencies?

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It is important to note that limiting the access of the population to cryptocurrency is a very difficult task. This is not fiat: digital currencies are immaterial and, moreover, decentralized (at least, they should be). So forcibly removing them from circulation is tantamount to taking away from each PC. The dictatorial state is able to turn this, maybe, and under force, but will people calmly look at such a blatant restriction of freedom?

Thanks to decentralization, the impact on all holders of digital assets is impossible. There is no central body that can be influenced. The authorities can do only one thing: to limit the use of crypto-currency in the territory of a particular country. However, this task is by no means trivial.

Legislative prohibition of cryptocurrency 

Any ban must be supported by regulations, conditions for their implementation are necessary, as well as relevant bodies that will put this matter into practice.

In the law on the prohibition of cryptocurrency, it is necessary to define this phenomenon and to argue the reasons for imposing a veto. Typically, lawmakers appeal to money laundering with the help of crypto-currencies, the financing of terrorism and other extremist activities, and, of course, tax evasion.

Do not forget about the national currency, which any self-respecting state seeks to support. On this basis, you can even not burden officials with the composition of the new law: it is enough to amend the existing one. For example, the use of money surrogates is generally prohibited. If you enter into this category and crypto-currencies - the problem will be solved by itself.

The implementation of the legislative ban in practice follows a familiar scenario. Exchanges, exchangers and other sites associated with digital currencies are outlawed: they must be closed, which can be done at the provider level. And those who continue to interact with the cryptocurrency are fined, deprived of equipment or freedom.

It is interesting in this connection to recall the threat of the Chinese authorities to limit the supply of electricity to miners. It is quite an effective way to "cut off oxygen" to crypto-producers.

The answer is crypto-currency.

A scenario is realistic, wherein the case of mass prohibitions, more and more anonymous crypto-currencies will start appearing, which will allow these prohibitions to bypass. This explains the great popularity of Dash, Monero, Zcash and other currencies with a high degree of anonymity in Asian countries, where the pressure of regulators is great.

Detect users of such money is extremely difficult and expensive. It is unlikely that the state and law enforcement agencies will suddenly have so many skilled and technically savvy staff to exercise full control over the circulation of the cryptocurrency. In such cases, ordinary violators are left alone, focusing only on "large fish". And the majority thus will have the freedom to use the cryptocurrency: you will not catch everyone by the hand.

Caution and once again caution

Even with the existence of prohibitive norms, finding and punishing hundreds of thousands of crypto users is a difficult task. And non-compliance with prohibitions in practice threatens the authorities with loss of prestige and a downgrade. Not to mention the fact that the state should overstep the stick, followed by social protests and riots.

All this, most likely, will entail the rejection of radical measures and the conduct of a soft prohibitive policy, which at best only demonstrates the position of the authorities, but does not specifically stop anyone. The population will continue to keep and conduct operations with crypto-currencies, just go into the shadow sector, where the bans do not work. So is not it better to take control of the phenomenon, even if it provokes disapproval than after an ineffective ban to face the inability to influence its presence?

Any prohibition can be bypassed if desired and the availability of the need. For example, in Thailand, crypto-exchangers were able to circumvent the requirement for a license in a simple way, adding to the user agreement the clause that buyers are obliged not to change the currency they have acquired from their cryptocurrency.

In the end, the banning of digital money will not only give anything, but it can cause a chain of negative economic consequences: the outflow of capital to other countries where the cryptocurrency has been given a legal status. This is happening now with China, where investors flee to the markets of Japan and other countries, and with Russia, whose Belarusian neighbor has embarked on the path of full legalization. Why should entrepreneurs struggle for survival in the country with a ban, if one can transfer their capital and activities to a legal, risk-free field?

The option of taxing the CIS is much more sustainable. Thanks to this, the budget will be replenished, and if the crypto-currencies receive a legal status, the investments of entrepreneurs developing their projects will flow into the economy of the country.

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Disclosure:

I have received no additional compensation other than the Ethereum that Hade Technologies pays to produce Exclusive content

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