The greatest threat to crypto-currencies are Western governments. It is no secret that governments don’t like crypto. It’s not just authoritarian regimes like China and Turkey. Also Western authorities, with the US at the fore-front, are “officially” concerned about money laundering and the environmental damage caused by Bitcoin mining. But the “real” reasons are that governments simply don’t like assets they cannot regulate or control.
Therefore, the threat of a government regulatory clampdown is the biggest danger to cryptocurrencies.
Cryptocurrencies based on blockchain technology may be a novel concept. But the idea of private currencies not minted by the government is not.
History offers many examples of currencies that emerged as alternatives to government-issued notes. But history also shows that as soon as an “alternative currency” is widely accepted as a store of value and can be produced and traded by anyone, governments start to dislike the situation and try to take control over the situation.
So far, cryptocurrencies, at least in Western developed economies, are still enjoying pretty much of a regulatory freedom. But this policy of neglect is starting to crumble. China banned banks from making transactions in Bitcoin in 2018, closing down many crypto exchanges in the process. Turkey banned all crypto payments recently, showing concerns about anonymity and lack of regulation. India is considering the same. Western countries and their central banks, with UK’s Bank of England spearheading this movement, are thinking of their own crypto money, so they can start regulations. Is it just a question of “when” than “if” Western governments try to regulate the crypto market?
Sven Franssen