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Why Do Some Countries Refuse to Deal with Cryptocurrency?
One month into 2022, the cryptocurrency debate is already raging, with requests for regulation producing a schism between governments that are "crypto friendly" and those that aren't. Which of the following will influence the market's future?
Dmitry Chernyshenko, Russia's Deputy Prime Minister, is said to have signed a roadmap to govern crypto activities in Russia. The announcement comes after Russia's central bank issued a consultation paper proposing a total ban on cryptocurrency-related activity in the nation.
According to the research, Cryptocurrencies: Trends, Concerns, and Regulation, "wider adoption of cryptocurrencies raises major risks for the Russian financial industry." It claims that non-state-based currencies endanger citizens' well-being by causing investment losses due to market instability, scams, and cyber assaults.
Jurisdictions have wrestled with the notion that decentralised digital currencies provide an alternative to sovereign money — and hence constitute a challenge to central banks' ability to control monetary policy.
Although Russia has refrained from entirely restricting activities within its borders, the new developments are part of a larger pattern of states trying to embrace bitcoin. The future of the sector will be determined by future bans or regulations.
Is it better to be anti-crypto or pro-crypto?
China has repeatedly prohibited bitcoin trading. An outright ban on crypto mining last year was a huge blow to the business, given the majority of crypto mining took place in China.
Mining is the process of executing software on computer servers in order to solve cryptographic algorithms. This procedure validates transactions and keeps a shared record of them across the blockchain network. Participants, known as "miners," are automatically paid in cryptocurrency.
Mining is a global industry, and significant sums of money are invested on the land, power, and infrastructure required to set up mining warehouses.
The Chinese mining embargo compelled miners to sell or ship their equipment abroad and invest funds in friendlier nations, primarily the United States. As mining operations were diversified, the network was strengthened as a result. As a result, future prohibitions may have less impact on the market.
Currently, the majority of Bitcoin mining takes place in the United States, Kazakhstan, Russia, Canada, Malaysia, and Iran. Some networks are confronted with significant obstacles. For example, in Kazakhstan, power has apparently been rationed away from miners in order to conserve energy during power outages, pushing miners to flee the nation.
According to reports, Kazakhstan's economy will lose US$1.5 billion (or A$2.14 billion) over the next five years, including US$300 million in tax revenue.
Crypto isn't completely 'anonymous.'
Since Bitcoin's anonymous birth in 2009, cryptocurrency has gone a long way. There are currently thousands of cryptocurrencies, with a total market cap of over US$1.66 trillion (almost A$2.36 trillion).
It is frequently argued, especially in a recent report by Russia's central bank, that the anonymity of cryptocurrencies facilitates unlawful behaviour such as money laundering, terrorism financing, and drug trafficking.
This is not totally correct. In truth, the transaction history on public blockchains such as Bitcoin and Ethereum (the two largest by market value) is open to the world.
Many governments, including those in Australia and the United States, work with huge private blockchain analytics corporations to track individuals' crypto wallet addresses and transactions. They do this to reduce the likelihood of money laundering and tax evasion.
Contrary to popular misconception, most cryptocurrencies are pseudonymous rather than anonymous. If a person's identity is linked to their wallet address via a central touch point, such as a cryptocurrency exchange or an email, that wallet can be traced back to that person.
According to research (commissioned by Zcash but conducted by the Rand corporation), there is no widespread criminal use of "privacy coins" that protect users' anonymity.
Future directions will be determined by policy
Cryptocurrency is becoming more popular as a financial asset class, technological infrastructure, and a social experiment in non-state-based infrastructure.
As a result, crypto communities are gaining clout in public policy debates. Last year, for example, crypto proponents were able to stall a significant federal government infrastructure bill in the United States.
Nonetheless, jurisdictions take diverse paths in terms of policy and legislation. Some countries, including China and Russia, see it as a budgetary and ideological challenge to sovereign currencies. Others see it as a chance for economic growth, innovation, and investment.
As new techniques develop, 2022 could be a watershed moment for both the crypto business and those vying to ban or welcome it.
In the past, governments that welcomed crypto networks reaped economic rewards in the form of innovation, investment, jobs, and taxation. Access to new demography and technological efficiencies in treasury management are among the business benefits of embracing cryptocurrency as a digital asset.
At the same time, the industry's response to policy and regulation illustrates that cryptocurrency isn't a wholly decentralised entity that resides just on the blockchain.
The status of Australia
In the race to limit but gain from cryptocurrencies, Australia has emerged as a prospective "crypto-friendly" country. The Senate Select Committee on Australia as a Technology and Financial Centre produced a report in October that is favourable to cryptocurrencies.
It offers market licensing for cryptocurrency exchanges, simplified taxation, and a regulatory structure for "decentralised autonomous organisations," or DAOs. These operate under the same self-governance idea as decentralised cryptocurrency networks, with blockchain technology and cryptocurrency tokens used to manage participation and enforce regulations.
Australia's option is to capitalise on the massive economic potential of decentralised digital assets. It remains to be seen how this will affect the national economy. However, if history is a lesson to be learned, we can expect policy to influence outcomes.
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By Crypto PiratesOne month into 2022, the cryptocurrency debate is already raging, with requests for regulation producing a schism between governments that are "crypto friendly" and those that aren't. Which of the following will influence the market's future?
Dmitry Chernyshenko, Russia's Deputy Prime Minister, is said to have signed a roadmap to govern crypto activities in Russia. The announcement comes after Russia's central bank issued a consultation paper proposing a total ban on cryptocurrency-related activity in the nation.
According to the research, Cryptocurrencies: Trends, Concerns, and Regulation, "wider adoption of cryptocurrencies raises major risks for the Russian financial industry." It claims that non-state-based currencies endanger citizens' well-being by causing investment losses due to market instability, scams, and cyber assaults.
Jurisdictions have wrestled with the notion that decentralised digital currencies provide an alternative to sovereign money — and hence constitute a challenge to central banks' ability to control monetary policy.
Although Russia has refrained from entirely restricting activities within its borders, the new developments are part of a larger pattern of states trying to embrace bitcoin. The future of the sector will be determined by future bans or regulations.
Is it better to be anti-crypto or pro-crypto?
China has repeatedly prohibited bitcoin trading. An outright ban on crypto mining last year was a huge blow to the business, given the majority of crypto mining took place in China.
Mining is the process of executing software on computer servers in order to solve cryptographic algorithms. This procedure validates transactions and keeps a shared record of them across the blockchain network. Participants, known as "miners," are automatically paid in cryptocurrency.
Mining is a global industry, and significant sums of money are invested on the land, power, and infrastructure required to set up mining warehouses.
The Chinese mining embargo compelled miners to sell or ship their equipment abroad and invest funds in friendlier nations, primarily the United States. As mining operations were diversified, the network was strengthened as a result. As a result, future prohibitions may have less impact on the market.
Currently, the majority of Bitcoin mining takes place in the United States, Kazakhstan, Russia, Canada, Malaysia, and Iran. Some networks are confronted with significant obstacles. For example, in Kazakhstan, power has apparently been rationed away from miners in order to conserve energy during power outages, pushing miners to flee the nation.
According to reports, Kazakhstan's economy will lose US$1.5 billion (or A$2.14 billion) over the next five years, including US$300 million in tax revenue.
Crypto isn't completely 'anonymous.'
Since Bitcoin's anonymous birth in 2009, cryptocurrency has gone a long way. There are currently thousands of cryptocurrencies, with a total market cap of over US$1.66 trillion (almost A$2.36 trillion).
It is frequently argued, especially in a recent report by Russia's central bank, that the anonymity of cryptocurrencies facilitates unlawful behaviour such as money laundering, terrorism financing, and drug trafficking.
This is not totally correct. In truth, the transaction history on public blockchains such as Bitcoin and Ethereum (the two largest by market value) is open to the world.
Many governments, including those in Australia and the United States, work with huge private blockchain analytics corporations to track individuals' crypto wallet addresses and transactions. They do this to reduce the likelihood of money laundering and tax evasion.
Contrary to popular misconception, most cryptocurrencies are pseudonymous rather than anonymous. If a person's identity is linked to their wallet address via a central touch point, such as a cryptocurrency exchange or an email, that wallet can be traced back to that person.
According to research (commissioned by Zcash but conducted by the Rand corporation), there is no widespread criminal use of "privacy coins" that protect users' anonymity.
Future directions will be determined by policy
Cryptocurrency is becoming more popular as a financial asset class, technological infrastructure, and a social experiment in non-state-based infrastructure.
As a result, crypto communities are gaining clout in public policy debates. Last year, for example, crypto proponents were able to stall a significant federal government infrastructure bill in the United States.
Nonetheless, jurisdictions take diverse paths in terms of policy and legislation. Some countries, including China and Russia, see it as a budgetary and ideological challenge to sovereign currencies. Others see it as a chance for economic growth, innovation, and investment.
As new techniques develop, 2022 could be a watershed moment for both the crypto business and those vying to ban or welcome it.
In the past, governments that welcomed crypto networks reaped economic rewards in the form of innovation, investment, jobs, and taxation. Access to new demography and technological efficiencies in treasury management are among the business benefits of embracing cryptocurrency as a digital asset.
At the same time, the industry's response to policy and regulation illustrates that cryptocurrency isn't a wholly decentralised entity that resides just on the blockchain.
The status of Australia
In the race to limit but gain from cryptocurrencies, Australia has emerged as a prospective "crypto-friendly" country. The Senate Select Committee on Australia as a Technology and Financial Centre produced a report in October that is favourable to cryptocurrencies.
It offers market licensing for cryptocurrency exchanges, simplified taxation, and a regulatory structure for "decentralised autonomous organisations," or DAOs. These operate under the same self-governance idea as decentralised cryptocurrency networks, with blockchain technology and cryptocurrency tokens used to manage participation and enforce regulations.
Australia's option is to capitalise on the massive economic potential of decentralised digital assets. It remains to be seen how this will affect the national economy. However, if history is a lesson to be learned, we can expect policy to influence outcomes.
Support us!