Reasons Governments Hate Cryptocurrencies

Jasmine

VIP Contributor
Do you know why crypto market has crashed? There are two reasons: one, high inflation rate, two, Macro Fear. It all started with President Joe Biden’s “Executive Order on Ensuring Responsible Development of Digital Assets,” in March, Russia’s invasion in Ukraine, the current rise in the interest rate, and fall in the stock market.

Governments around the world have always have been hard on cryptocurrencies. Do you know why?

Anonymity

Crypto transactions are recorded on the bockchain but the transaction does now show the sender and receiver. When someone sends Bitcoin, he can do it anonymously. Government cannot track who sent funds to whom. Therefore, government believes that crypto will be used for illegal transaction and money laundering.

Decentralization

For governments, decentralization is also the major danger associate with cryptocurrencies. Decentralization will stop government’s financial monopoly. It also poses a great market risk, that’s why the value of crypto currencies fluctuates too much. For instance, in November last year, Bitcoin was $69,000, currently, it is $28,000.
 

Holicent

VIP Contributor
Governments hate cryptocurrencies because of their decentralized nature, lack of control over their circulation, and their ability to eliminate the need for third-party intermediaries. The decentralized nature of cryptocurrencies means that there is no centralized authority that controls the currency or regulates its circulation. The users are responsible for managing the network and validating transactions. This eliminates the need for third-party intermediaries such as banks and other financial institutions.

The lack of control over cryptocurrency circulation has made governments uncomfortable with them because they cannot track and monitor transactions as they would with fiat currencies. This makes it difficult for governments to collect taxes and fees on transactions, which is one reason why they want to regulate cryptocurrencies.

Cryptocurrencies eliminate the need for third-party intermediaries such as banks by eliminating any middlemen between buyers and sellers when it comes to exchanging value between each other through an online transaction platform like Ethereum or Bitcoin (BTC). This has made governments concerned about losing out on tax revenue that could be collected from these types of exchanges if they were allowed without regulation in place first. Amidst all these, government or should I put countless politicians also use cryptocurrency to their dubious advantage, I feel some countries are not condemning it because it's bad but because so many citizens are benefiting from it.
 

Shaf

Verified member
One of the ways that government can control their citizens is by interfering in their finances. As the main medium of exchange these days, if you can restrict or release the money at will, you can get people to do as you wish.

The decentralized approach that cryptocurrency, especially Bitcoin has taken makes this really hard.

Another thing to consider is that the government has the interest of its citizens at heart. Cryptocurrency can be used for all forms of illegal transactions which can hurt those citizens, directly or indirectly whole they have no power to control such. For example, money laundering, or black market deals can be made easier with the anonymity of cryptocurrency.

Another reason is that cryptocurrency is a means of transacting huge sums of money without paying tax to the government. By bypassing traditional banks where the government has some power to get taxes and generate revenue, cryptocurrency ensures that such money goes to individuals instead. Government need such money to carry out projects and keep things running, so it's no surprise they don't like cryptocurrency.
 

Ithedicious

Valued Contributor
Even though cryptocurrency generally is decentralized but this does not mean that government cannot regulate cryptocurrency . So many countries are regulating cryptocurrency and because of this all investors have certain rules and regulation they must follow before investing.

Generally I don't know the reason for regulation of cryptocurrency but whatever the reason may be we also have to understand that most government do not like cryptocurrencies . This is very true.

Apart from the two you have just mention , one of the most important reason why government do not like cryptocurrency is the fact that so many people are withdrawing their fun from the banks and other financial institute to invest in cryptocurrency which is an online decentralized system that does not in any way add value to the economy of one's country. They just believe that if people keep on investing in cryptocurrency they will be a time this might affect their economy , hence they consider cryptocurrency as a threat or agents sent to destabilize the economy of one's country.
 
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