In the series “10 Biggest Myths About Cryptocurrencies”, we will take a closer look at 10 most widely used claims about crypto currencies and their opportunities and risks. In doing so, we will daily explore a new myth and check it for accuracy.
Myth 2: States can not regulate crypto currencies and will sooner or later ban them
Above all, this myth is found among adherents of conventional financial and economic policy, who prefer a centralized monetary and monetary system controlled by a state and a central bank to a decentralized structure. The accusation is that crypto currencies lack an ordering hand by the absence of a central intermediary, which can direct things in the given direction, intervene in case of emergency, if something does not go as intended and is generally able to contain excesses.
If you take a closer look at reality, you will see that there are actually a lot of different regulatory measures around the world right now. Examples of successful active regulation include the Crypto Valley Zug in Switzerland, which aims to support the development of crypto currencies and is already gaining widespread acceptance in public institutions, as well as minimum standards for Japan, which has distributed licenses for certain crypto exchanges to set and dubious providers in the illegality.
However, the area currently most affected by regulation is the area of Initial Coin Offerings (ICOs). Almost all governments that deal with the issue have already issued warnings to their respective populations. In a radical move, the People’s Republic of China issued a general ban on ICOs in the country in September, shortly thereafter South Korea acted like its big neighbor and also issued a ban. In a further step, China also ordered the temporary closure of all crypto exchanges operating in the country.
Again, one can, however, with alternative measures against it. In Canada, for example, there is a regulated ICO where the state collaborates with a Blockchain start-up to conduct a token sale.
Therefore, this myth can be explained like this: Even if states have no patent recipe for the regulation of crypto currencies in hand and there are countries that resort to partial prohibitions, there are also examples that show how it to a long-term and crypto-friendly regulation can come. The chances of such regulation are good, as there will always be countries, and especially offshore financial centers, that have a liberal attitude towards the crypto-economy. As a result, there is mounting pressure on global governments not to force too restrictive crypto policies to provoke capital outflows and loss of control to offshore financial centers.
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