Almost since its inception, the legality of cryptocurrency has varied highly dependent on the region. Although most countries haven’t officially declared the use of bitcoin and its related crypto instruments as illegal, their recognition for digital currency as a substitute for fiat currency is still under heavy debate.
Some financial experts have argued that the undeniable reason why these countries have not embraced cryptocurrency is how its technology is disrupting traditional banking systems. Some of these countries consider the application of cryptocurrency as unethical since it allows individuals or/and companies to engage in fraudulent activities more easily. On the same note, blockchain technology limits the relevant authorities to receive interests/tax.
The manager of Merchant Accounts, McCall Robison, believes that control is the core issue why most countries have banned bitcoin:
“Many governments do not like the very idea that there is another form of currency that they are not able to control. Supervision takes place on the Internet. Some countries consider it a danger to their society and government.”
In a quest to explore the various reasons why cryptocurrency is still not welcomed in the various global communities, Blockchainreporter has looked into the top 5 countries that have had the worst reception for this new technology.
The Chinese government has made no effort to hide their clamp on all crypto-related businesses since early 2015. While it is evident that its capital city does support the development of the underlying blockchain technology, the government is still trying to limit any international crypto business roughly two years since banning their initial coin sales.
With the coming shift in technology from the traditional banking systems to blockchain, China became more vigilant on its restrictions on cryptocurrency especially after the rise of its prices. However, this led to traders coming up with ways to circumvent the government’s regulations.
In the last quarter of 2017, the central bank of Vietnam ruled out the use of cryptocurrency as a form of payment. Meanwhile, last year July, the State Securities Commission (SSC) in Vietnam forbid financial institutions, public companies, and security fund companies to engage in crypto-related activities.
At the same time, back in August 2017 Prime Minister Nguyen Xuan Phuc had approved a plan that included the Ministry of Finance, the State Bank of Vietnam, Ministry of Industry and Trade, Ministry of Public Security and Ministry of Information and Communications to coordinate and issue a comprehensive framework for the government’s consideration on cryptocurrency.
Even then, in July 2018, the Central bank agreed to suspend importation of crypto-mining gadgets. As of now, the Vietnam government does not focus on cryptocurrency under the purview of its regulation but rather on more general blockchain technology.
In April 2017, the Central Bank of Bolivia (BCB) warned the public against the use of coins not issued by the state or central bank. The statement noted that so-called virtual currencies don’t qualify in all economic functions of money.
El Banco Central de Bolivia, the central bank of the South American nation, told its citizens that they aren’t allowed to denominate pricing in any currency that hasn’t been previously approved by the government.
The ban was put in place to protect the boliviano national currency and ‘safeguard the citizens’ against any currencies that can cause them to lose money.
The government of Ecuador banned the use of bitcoin and any other cryptocurrency in July 2014.
However, the Assembly’s Economic Commission held a debate to introduce the country’s own digital currency. Not to be confused with Venezuelan’s Petro, Ecuador planned to revamp their monetary system by replacing it with Ecuador’s Sistema de Dinero Electrónico (electronic money system). Diego Martinez, an economist and a delegate of the President of the Republic to the Board of Regulation and Monetary and Financial Policy stated, “Electronic money is designed to operate and support the monetary scheme of dollarization.”
The Moroccan cryptocurrency sanction was the newest in November 2017 when the government together with the central bank banned any transactions made through cryptocurrency.
The Foreign Exchange Office warned;
“Penalties and fines will apply to anyone engaging in transactions with foreign countries that do not go through authorized intermediaries or in foreign currencies not listed by Bank Al-Maghrib.”
The ban was not received well by most bitcoin traders, saying it is a step back from the innovative project of harnessing blockchain technology. Although the crypto community didn’t like this approach, the government stated that the lack of a juridical framework to protect the users from theft or embezzlement was a major reason for the ban.
In the end run, as much as bitcoin and other cryptocurrency have been in operation for over ten years, most governments are still cautious in investing and allowing its application in their respective countries. The above bans reveal that although blockchain technology is revolutionizing cross border transactions, some borders are still restricted areas for crypto technology to cross.