With the rise in cryptocurrencies over the last several years, it is possible that we could be experiencing the downfall of cryptocurrencies in the coming months and years. With constant innovation comes new rules and regulations, which many countries across the globe have had to think about recently.
In the United States, there is a rumor that the Biden administration could issue an Executive Order for Cryptocurrencies this month to better evaluate the pros and cons of digital assets. Additionally, they want the executive order to implement a reporting system for the government on cryptocurrencies. There is also talk that the Executive Order may try to clarify the government’s position on central bank digital currencies.
The mayor of New York City, Mr. Adams, has announced that he wants to take his first three paychecks in the form of Bitcoin and Ethereum. This is a bit of a strategic move, as Mr. Adams hopes to make New York City the center of the cryptocurrency world as the base of operations for the industry. Yet, current federal labor laws require the city to pay wages in government-issued currency, so Mr. Adams plans to use a cryptocurrency exchange platform to convert his paycheck into cryptocurrency.
El Salvador is also looking to ramp up cryptocurrency usage by backing $1 million in bonds with cryptocurrency. Meanwhile, the International Monetary Fund is warning the country not to, as the privately issued tokens can bypass authorities and central banks, which would alter economic and currency stability.
While the U.S. is trying to ramp up cryptocurrency usage and engagement, other countries are working to implement laws that limit how citizens use cryptocurrencies. The Bank of Russia wants cryptocurrencies to be banned, as it believes that they are too volatile and widely used in illegal activities. Other countries, like Algeria, are also concerned that cryptocurrency could be easily used in illegal activities. Yet, Russia does not want to ban the use of cryptocurrencies for private citizens. Additionally, cryptocurrency allows people to take their money out of the Russian Economy and could make it harder for the regulator to maintain optimal monetary policies. The country has already seen large decreases in market caps, which may continue to decline if new regulations are not put into place.
Estonia is preparing to introduce new cryptocurrency regulations this month as well. The new law bans non-custodial software wallets and decentralized finance products throughout the country. The new law aims to change the definition of Virtual Asset Service Providers (VASP) so that it can now cover decentralized platforms. This is the only place you can hold Bitcoin, so then, you technically do not own that Bitcoin. The flood of new cryptocurrency laws came into effect after cryptocurrency in Estonia was involved in one of the biggest money-laundering schemes in Europe. In a similar fashion, India is now considering appointing a markets regulator, instead of banning cryptocurrencies, to oversee cryptocurrencies as financial assets.
Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia all currently have a full ban on cryptocurrency. These countries control 20% of the network’s total computing power and 0.19% of the bitcoin mining hash rate. These statistics could continue to grow as more countries start to implement cryptocurrency regulations. While cryptocurrency is not likely to disappear overnight, we may see less and less of it as more rules and regulations are developed in this industry.