Bitcoin has come a long way in ten years. From obscure and unheard of, to fully present; on the coins eleventh birthday, it is due some wild bitcoin regulation.
While bitcoin isn’t exactly looking forward to its letter from Hogwarts, it’s 11th year is sure to be one to remember. As the coin has spent the last ten years focused solely on adoption and access, 2020 may serve to put all of that hard work on its head.
2020 is definitely setting itself up to be remembered as the year that bitcoin underwent expensive regulation. In 2009, Satoshi Nakamoto, an unknown person or persons, presented the world with a novel idea. A better way to think about and use the currency. The paper “Bitcoin: A Peer-to-Peter Electronic Cash System” outlined a novel system. In which online payments could be sent from one party to another without the use of a centralized financial system.
Preventing the possibility of double-spending by effectively removing the “trusted third party” i.e.- central banks. By using the decentralized currency in conjunction with a proof-of-work public ledger, bitcoin would effectively cut out all third party influence and expense when it came to transacting finances online. While still heralded as a brilliant, and widely necessary, idea, bitcoin is quickly beginning to fall prey to third party intervention and KYC schemes. Effectively stamping out what it stood for in the first place.
Bitcoin Regulation: What This Means for Bitcoin Users
Maybe nothing. Maybe something. The thing about bitcoin is that most people have their own and widely varied reasons for owning the cryptocurrency. Some use the global currency as they would fiat, except enjoy the lack of conversion fees. Others were happy to see a lucrative investment potential. Still, others enjoy the idea of keeping their finances and purchase patterns anonymous.
Whatever the reason for holding bitcoin, the likelihood that users will face some manner of new regulation for it in 2020 is fairly high. Governments have definitely seemed to take notice of cryptocurrencies, and begin to view them as a staple in our modern world. As opposed to the passing fad they were once considered.
US Bitcoin Regulation
The US has proposed a bill that would enact a comprehensive regulatory framework for all digital assets held by Americans. This most definitely aims to include bitcoin. Dubbed “The Crypto-Currency Act of 2020”, the bill looks to better identify which agencies are in charge of the regulation of crypto-assets, further regulate and define exchanges and discusses mandatory reporting laws for users.
Perhaps the most shocking part of the bill to most crypto users is the hope to establish rules that allow tracing of transactions. If you’re not outraged, you’re not using bitcoin. Expressly going against the initial premise of the coin, the US suggests that being able to trace transactions would keep the criminality at bay, but in reality- it just exposes existing users and can generate revenue and double-spending.
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Countries That Have Banned Bitcoin
Some countries are straight-up refusing to play ball with any cryptocurrencies, putting an all-out ban and harsh penalties on any use of digital currencies. While bans on the coins are notoriously hard to enforce, as there are simple measures a user can take to circumvent these bans, the punishments given to the found users more than enough motivation not to use them.
Among the countries that have banned bitcoin for a variety of reasons are:
- Afghanistan
- Pakistan
- Algeria
- Bolivia
- Bangladesh
- The Republic of Macedonia
- Saudi Arabia
- Qatar
- Vanuatu
- Vietnam
In other countries, currencies may not be banned, but the strict bitcoin regulations are imposed to make the coin less than easy, or desirable, to own. Most of these countries don’t allow bitcoin to be used for trading or payment. Rendering them near useless.
- China
- India
- Ecuador
- Indonesia
- Morocco
- Zambia
- Nepal
- Egypt
- American Samoa
China Attempts to Create Strict Bitcoin Regulation
In 2019, the country announced that it “would block access to all domestic and foreign cryptocurrency exchanges and ICO websites.” Which has also served to shut down bitcoin mining operations throughout the country. Creating a harsh contrast between China’s early adoption of the coin and what 2019-2020 has promised to bring. In 2017, China imposed a ban on ICOs, which served to drop bitcoin prices by 6%.
It’s unknown whether further regulation will continue to pose negative effects on the price of bitcoin, but time will surely tell. Skeptics warn that an attempted ban on cryptocurrencies could only serve to produce a rise in scams and Ponzi-schemes, through the adoption of unlawful digital currencies.
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EU and Japan Embrace Favorable Bitcoin Regulation
While the US, Canada, China, and Russia seem to be interested in crypto but are wanting to keep an incredibly tight grip on its future, countries of the EU and Japan are essentially welcoming crypto with open arms.
While the EU has proposed legislation known as the EU Fifth Anti-Money Laundering Directive (5AMLD), which will require exchanges and wallets to identify customers and register for services. In an effort to discourage money laundering, but some countries are resisting this implementation. Germany, Italy, The Netherlands, and even the UK are all on board, prepared to release the regulation on time. While others seem to be dragging their feet, hoping to preserve the sanctity of crypto.
But the EU also seems to be hesitant to enact any sort of regulation beyond that of actually deterring criminal activity. Crypto exchanges are largely encouraged to comply with 5AMLD so that the market can continue to flourish and adoption of bitcoin can continue uninterrupted.
Japan has been a proponent of bitcoin and associated technologies from the get-go. Granted it’s the supposed country of origin of bitcoin, Japan has played host to some of the biggest international exchange platforms and a wide range of different virtual currencies. Despite a ton of hacks and attacks the country has still managed to scrape out a pretty penny from the popularization of digital currencies. Japan hopes that their favorable stance on cryptocurrency will eventually lead international investors to look their way, should the inventor’s own country bitcoin regulation prove unfavorable. Further strengthening the economy of Japan.