Many Americans wonder whether the United States will outlaw Bitcoin. To understand why this question arises, we must return to 1933, when President Roosevelt issued Executive Order 6102, requiring American citizens to surrender their gold to the Federal Reserve. The reasoning behind this was to stabilise the economy by seizing citizens' private property.
There are a few significant differences between the situation with gold in 1933 and the situation with Bitcoin in 2023. To begin, Bitcoin has a distinct structure that is safeguarded by cryptography. Bitcoin is secure as long as you have your private keys, and it would be difficult for the US government to seize an asset that is protected by private keys. Furthermore, millions of people hold Bitcoin around the world, making it difficult to determine who still has control over their Bitcoin and who has lost their private keys.
Second, it is unclear how holding confiscated Bitcoin would benefit the US government. Having Bitcoin would not solve the government's problems with deficits, Social Security funds running out, or other liabilities. The US dollar is not backed by Bitcoin, and the US government has no other use for Bitcoin besides holding it as a reserve asset. As a result, any Bitcoin confiscated by the US government will almost certainly be sold back to US citizens to help offset dollar liabilities. As a result, the confiscation would only serve as a revenue generator and would not result in Bitcoin falling into the hands of the US government.
Instead of seizing Bitcoin itself, the US government could seize mining equipment and attempt to control a significant portion of the global mining hash rate. Following China's 2021 mining shutdown, a significant portion of the global hash rate shifted to the United States, with Texas alone accounting for around 10% of the global hash rate. Controlling the mining hash rate is easier than controlling the private keys, but controlling the mining hash rate does not necessarily imply control over Bitcoin. Even if the US government controls 51% or more of the hash rate, they would need to persuade node operators and other market participants to accept their proposed network changes.
The possibility of the US confiscating Bitcoin raises concerns, but the government is unlikely to prohibit ownership of the cryptocurrency because it would be impractical and counterproductive. The majority of Bitcoin users are located outside of the United States, and a ban would only push Bitcoin adoption and ownership elsewhere. Furthermore, several congressmen and senators own Bitcoin, and it is estimated that 15% of the US population owns cryptocurrencies. While regulators may increase their scrutiny and regulation, full confiscation is not expected. Keeping your private keys is still the best way to own Bitcoin, and people should continue to stay informed and educated about the changing regulatory landscape.
Source:
Anthony Pompliano, 18 April 2023, "Will The US Ban Bitcoin?",
