However, regulation is a necessity with forked importance, and many countries have employed it to either grow or keep the crypto industry down.
Increasing Regulatory Oversight
Cryptocurrencies are facing stricter regulations every day as the global government crackdown intensifies. Bitcoin, the leading cryptocurrency, fluctuates to reflect these impositions. Many Altcoins coupled with the BTC market movement have also seen a drastic decline in prices.
These strict government regulatory impositions are sometimes leveled on exchanges to discourage money laundering activities. Many players in the industry have welcomed regulation, acknowledging it will help to weed out the bad actors, while others express concern that it is affecting the market growth.
In this article, we will look into countries imposing strict regulations on crypto activities. We will also explore those who have already drawn a red tape against crypto.
Why Some Governments Impose Strict Regulations
There are many reasons Governments impose regulations on cryptocurrencies.
Fear of the Unknown
Most governments are afraid crypto-related activities will weaken their currency and crumble their economy. Thus, they fight its growth by banning or imposing strict regulations to discourage users.
Curbing Money Laundering
Crypto never had a good reputation in its early days. First, it was accused of being the currency of the dark web and criminals, to discourage legitimate users from engaging with it. Over time, in order to manage its spread, governments began to impose strict KYC, and AML regulations to checkmate the excesses of bad players. This is to help stop illegal money movements used in financing Global terrorism etc.
Losing Centralised Control
Cryptocurrencies cut out the ideas of the third party which also includes Governments. Power is always about control especially in areas related to finance and currency. For most Governments, whatever they cannot control must go, or be subjected to stringent subtle control that masks itself as regulations.
Directives of the IMF
The international monetary fund as an acclaimed financial authority many times dictate to countries how to run their monetary policies. When this happens, most countries out of respect or sheer fear of an international financial backlash impose regulations to adhere to the IMF directives. For example, the IMF, on Nov. 22, on a mission concluding statement warned El Salvador not to use BTC as a legal tender. Although El Salvador is yet to respond to this as of press time.
In no particular order, we will be looking into countries imposing strict crypto regulations and those that have already imposed these regulations.
The United Kingdom
The United Kingdom is one of the countries with very strict crypto regulations. In fact, as of Jan. 10, to operate any crypto business or market products in the country you must be fully approved by the Financial Conduct Authority (FCA). Many crypto exchanges could not pass the regulatory framework of the FCA and thus cannot operate in the UK.
Despite the strict FCA regulations around who can operate a crypto business, the UK is very relaxed about allowing citizens to invest and trade with cryptocurrency. Making it a great place for those trading and using crypto.
According to a bulletin published on India’s parliament’s website, on Nov. 22, the country is looking to impose strict regulations on cryptocurrency with plans of running a CBDC.
“To create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.
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Iran has a very strict crypto policy. But in 2019, the Iranian Government recognized Crypto mining as an industrial activity. While it is legal to mine cryptocurrencies for agencies approved by Iran’s ministry of industries, it is illegal to trade them. Iranian authorities always crackdown on defaulters. Legal miners are expected to sell all their mined coins to the government. Only banks and approved exchanges can use crypto mined in Iran for importation and international trade.
China is known for its strict crypto policies and purge. Apparently, for all the countries with strict crypto policies, China is leading the pack. Their popular crackdown earlier this year had a very great impact on the global crypto economy.
Nigeria has a strict cryptocurrency regulation. Nigeria is the first country to launch a CBDC to boost the country’s economy and ease economic activities. Yet, cryptocurrencies are still banned in the country. Thus, both exchanges and crypto firms are not allowed to operate in the country.
Finally, while there are many other countries cracking down, there are also others who are making plans to establish themselves as a crypto city. A country where everything cryptocurrency will be accepted. Regulation is just another tool to balance the financial narrative of power players. But as for users, they always find a way around the scourge.