Government crackdowns on domestic Bitcoin trading will continue if capital flight becomes a serious issue
What a difference a year makes for Bitcoin.
At the beginning of 2017 the cryptocurrency not only began its meteoric rise in price compared to the world’s global currencies, but it also saw numerous governments commence their first real set of regulations and outright crackdowns as more and more investors used Bitcoin as a means to get out of their domestic currencies and into what they perceived were more stable ones.Â And it is this capital flight fear that led China to go from being the world’s biggest trader of Bitcoin, to nine months later being the most draconian regulator of it.
Chinese regulators say they are on the right track in deciding to rein in digital currencies, according to central bank deputy governor Pan Gongsheng.â€śIf we didnâ€™t shut bitcoin exchanges and crack down on initial coin offerings a few months ago, and if more than 80 percent of the worldâ€™s bitcoin transactions and financing activities were still taking place in China, which was the case back in January, what would it be like today? Itâ€™s scary to think about,â€ťÂ said the banker as quoted by Chinese business daily Yicai.
China, once the worldâ€™s largest bitcoin trading market, clamped down on cryptocurrency exchanges earlier this year. Beijing suspects the trade in cryptocurrencies is being used by Chinese citizens to move cash abroad. In September, the countryâ€™s regulator banned bitcoin trading and initial coin offerings (ICOs). –Â Russia Today
Yet China is not the only country to impose severe restrictions on the buying, selling, use, and trading of cryptocurrencies, in fact most of the BRICS nations have either initiated policies on it and the exchanges that trade in cryptocurrencies, or have passed legislation which regulates or outright bans them within their borders.Â Additionally, just last night UK Finance Ministers announced they wereÂ implementing a crackdown on Bitcoin and other cryptocurrenciesÂ as their growing volume is seen to be threatening national security through their ‘potential’ as a money laundering tool, or a backdoor method for funding terrorism.
Nearly all public announcements by government authorities against cryptocurrencies is propaganda based on the fear that one day a critical mass of their populations will reject the current financial system and seek to take their money out from under the control of central authorities.Â And it was really only a matter of time before more and more governments would recognize cryptocurrencies as a viable threat to their power, and where it is becoming likely the world will see more intrusion into how Bitcoin is used as the fear of capital flight in the midst of another financial crisis forces them to institute draconian measures.
Kenneth Schortgen JrÂ isÂ a writer forÂ The Daily Economist,Â Secretsofthefed.com,Â Roguemoney.net, andÂ Viral Liberty, and hostsÂ the popularÂ youtube podcastÂ on Mondays, Wednesdays and Fridays.Â Ken can alsoÂ be heard Wednesday afternoons giving an weekly economic report on theÂ Angel Clark radio show.