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Countries Attempt Banning Bitcoin

The biggest risk to Bitcoin is a coordinated negative stance by all the major governments of world. The first and most dangerous tool at their disposal is the ability to completely ban the use and ownership of Bitcoin. There have been attempts in the past by the governments of India and China to ban Bitcoin. These were knee-jerk reactions in the early days of Bitcoin when the technology wasn’t well understood. These governments have since backed off their initial strong stance of completely banning it and now look to heavily regulate it.

We don’t believe banning Bitcoin by a single country would have its intended affect. Bitcoin users would simply leave the country that banned it or easily conceal the fact they hold and use Bitcoin. The fact that people are able to transact freely with each other without involving a third party makes it easy for people to conceal transaction in a country where it is banned. Other countries looking to gain an advantage on the country that has banned it, would welcome Bitcoin users with open arms. We have already seen this “regulatory arbitrate” with countries such as Malta having lax rules around the use of Bitcoin and other Blockchain technologies.

Affecting On and Off Ramps

A bigger threat to Bitcoin is the government’s ability to choke off the on and off ramps into the crypto economy. This threat is very real and evident in how the industry is regulated in Canada. The government of Canada creates extra barriers for buyers and sellers of Bitcoin, effectively reducing the usage. Sellers are required to follow strict “Know your Client” (KYC) and “Anti Money Laundering” (AML) policies. This can be very cumbersome for most buyers and sellers. Mass adoption is halted when if governments make it too hard for people to enter the Bitcoin economy. This is a subtle and easy to deploy tool and most governments are choosing to do so. If industry leaders do not continue to lobby for better regulations around Bitcoin, there is a real chance it will never leave the fringes and join the mainstream financial system alongside legacy assets.