Charles H. Miller
It is a known fact that many governments don’t like cryptocurrencies, though most has opted NOT to ban them. Nonetheless, they like the “good ol’ way” with their own central bank — or the multi-country one in the case of the EU — taking care of monetary policy.
So, some believe, this year we may see countries taking a more active role in the market. Some steps have already been taken by certain world actors; it all starts with ICO warnings (which we actually appreciate), then there are exchange regulations, and finally – we may see the first government-backed cryptocurrency, or more of them, emerging.
First contenders are here…
Government-backed cryptocurrencies have already been announced in Venezuela and Russia, with Japan also looking to join with its J-Coin. But they are still far from being considered “real money,” though perhaps when/if Japan joins this market, situation will change for the better.
In the meantime, the world’s richest and most influential people have discussed this topic at the recent World Economic Forum (WEF) in Davos, where country leaders expressed their intention to put some legislation and regulation into this market. We applaud some efforts, but some others we may not like as much.
For one thing, a government-issued cryptocurrency would not be decentralized and even pseudo-anonymous like Bitcoin; rather, controls would be put in place to make sure the government knows what you’re doing with your own money. And that’s the opposite of the original idea of Bitcoin.
On the other hand, any such [government-backed] cryptocurrency would not suffer from high volatility rate, and could thus be better suited to be used for everyday purchases. Governments would ensure the stability by backing these virtual assets with their natural resources like oil reserves and perhaps even gold.
“From my perspective, they will offer state country-wide cryptocurrencies like Crypto-ruble or crypto-barrel if they like to… back the oil they have or other natural resources,” Universa CEO Alexander Borodich told RT during WEF in Davos.
He went on to predict that this year we will see the first state-issued cryptocurrencies emerging to challenge the dominance of Bitcoin and other popular virtual currencies.
Underworld using crypto is a problem?
Despite the fact that the vast majority of terrorists operate in a cash-only “environment,” some people are scared that cryptocurrencies present a safe haven for the underworld. Sure, there were such cases in the past and some exchanges had to close their operations, but we are still talking about a fraction of the money that is being used for illegal purposes.
Adding fuel to the fire is the US treasury secretary Steve Mnuchin who said there is a concerted effort being made to prevent cryptocurrencies being used for illicit trade.
“My number-one focus on cryptocurrencies, whether that be digital currencies or Bitcoin or other things, is that we want to make sure that they’re not used for illicit activities,” he said.
Mnuchin went on to add that they do encourage fintech and innovation, but want to make sure all of financial markets are safe. “We want to make sure that the rest of the world — and many of the (Group of) 20 countries are already starting on this — have the same regulations,” he added.
IMF head Christine Lagarde somewhat agrees with this attitude. “The anonymity and lack of transparency and the way in which it conceals and protects money laundering and financing of terrorism is just unacceptable,” she said. “It needs to be taken into account but then there will be innovations coming out of these movements.”
All the people bashing crypto at Davos and consequent moves by major banks to block credit card purchases of cryptocurrencies did affect the market, but long-term — it is not clear they stand a chance in this revolution. Cause in a way, that’s what this is – a revolution!
