Many government of the world have placed a ban or restriction on crypto currency and its potentials in their country. They have their reasons and their policies have a effect on the economy. Lets explore some nations and the year, they place a ban on crypto or part of it.
Ecuadorian government suspend all crypto trading in their country in the year 2014. In its place, They launch their Digital Currency Electronic Payment (DCEP) which is in the form of digital coin that is pegged by their state fund.
In this year 2014, another south america country Bolivia placed a ban on any virtual money with focus on crypto currencies. They were afraid of its potential and decentralized nature.
China in 2017 placed a partial ban on crypto currency. The ban was on initial coin offering (ICO) and crypto trading. Also, they placed a restriction on bitcoin farms operating on their soil. But many of their citizen still trade on it due to its decentralized nature.
In 2018, Algeria, one of the country at the horn of Africa ban crypto currency and prohibits people and business for trading with it.
In 2018, India, one of the leading nation on technology and crypto currency, their government place a ban on vrypto trading. It should be transacted within the nation via their banks. It can not be converted or reconverted between the local currency but in the year 2020,Supreme court overturned the judgement making a way for the high rate of crypto adoption and usage in India.
Many other countries make some announcement against crypto without legal backing. Nigeria etc are some examples whose government does not accept crypto currencies. What might be their reason for these banning of crypto currencies?
UNDERGROUND AND
NEFARIOUS ACTIVITIES.
Many government are afraid that crypto and its potential can be used by criminal element for nefarious activities such as money laundering, tax evasion, buying of deadly weapon, terrorist financing etc. Their fear over underground activities on dark site where mentioned nefarious activities are carried out based on crypto currencies. Although there is privacy coin, which prevent the indetity are not give such opportunities.
LACK OF REGULATION AND SANCTIONS.
Due to the decentralized nature, Government find it hard to regulates the crypto currencies and its use cases. WithouPROTECTIONt regulation, the governments can't control the transaction via crypto currency and their finance is at risk. They can not have suitable laws to guide their citizenry and to punish defaulters.
CUSTOMER PROTECTION AND FINANCIAL STABILITY.
Government are afraid that they can not protect their citizen from volatile nature of the market in which they can lose their livelihood to fraudster and risk of scam projects so it will be better to be prohibited.
Due to the decentralized nature, there will be no control mechanism as seen in centralized market of traditional financial institutions where they makes laws at will geared towards at knowing everything about the transactions and taxing the process too.
FINANCIAL RIGHT AND AUTONOMY
There is a known fact that the decentralized nature of crypto currency makes it hard for government to control its process and potentials. It gives the right to be controlled to the several nodes (i.e, users) and ability to makes financial decisions and take risks.
Unlike what is attainable on traditional financial institutions on which governmental agencies control the financial and economic sector by making policies and decision as seem suitable to guide the financial transactions in their states.
National currencies as fiat are national symbols of the nation and its value depends solely on several monetary mechanism, financial policies and strategies adopted by the state but with the decentralized nature of crypto, that right and authority have been challenged and ushered by individual who can transacts freely at any volume and distance among them.
These are some of their reasons and known fears over crypto currency and they are placing ban on its potentials. But what are the effect of such actions? They includes;
DECLINE IN CRYPTO RELATED BUSINESSES.
In Nigeria, the adoption rate of crypto currency is very low because there is virtual no governmental supports, rather a ban on its process. Many see it as illegal and like ponzi scheme on which money are made illegally and should not accepted since governmental policies are against it.
With their pronouncement of bans over crypto, the innovations like startups and business are on declines as well as investment on this sector so as to ripe enough dividend are stifled. There is migrations of crypto related business to the crypto friendly nations and development on their economy as well.
WORLD TRADE EFFECT.
World trade have been affected seriously due to the banning of crypto currency. The negative impact of such bans makes nations of the world to be lagging behind on utilizations of the good will of crypto currency in the form of transparency and accountability to stamp out corruption and dominance on global scene.
World trade involves cross border transactions via crypto have been challenged by the negative twilights of this restrictions by some governments. Also, it brings about uncertainties among the investors on crypto due to lack of governmental backing.
UNDERGROUND TRADE
In Nigeria and other countries of the world on which their governments does not supports crypto currencies. It had pushed its related business as an underground economic activities on which can be done under the government's nose.
Crypto related transactions are robust and buoyant but renamed as "palm oil business" Across the banking system to avoid being sanction by governmental agencies. This is done as an underground trade. Which is not supposed to be so with governmental backing.
CONCLUSION
Crypto currencies and its process have come to stay with its technological and financial innovations and improvement on the economy and trade, so it will be wise to accept it as a means or mechanism of economic improvement.
The rate at which crypto are improving, with its potentials and innovations is very high. The innovation and advancement will be higher with all supports given from all sectors on the economy for improvement in investment and involvements. Also, rather than stifling the mechanisms of crypto, governments can provides an enabling environments for it to thrives positively.