Reasons to ban crypto for a country =

You may wonder if there are reasons for a country to ban crypto . You sometimes read on the news that banks are not at all happy with the arrival of cryptocurrencies. Banks are controlled by governments, which is why a country could have different reasons for banning them.

At the moment, there are already several countries that have banned cryptocurrencies. We are happy to tell you why these countries are doing this and what other reasons could be to ban crypto for a country.

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  • Reasons to ban crypto for a country
    • Government loses control
    • Unable to rescue the economy from the crisis
    • Payment defaults and corruption are a thing of the past
    • More criminal practices
    • Population can lose money
    • Too much risk for companies
  • Are there already countries that have banned crypto?

Reasons to ban crypto for a country

A country can have many reasons to choose to ban crypto. However, there are only a few reasons that are most important. You will especially notice that the government is afraid of losing control. Losing control can then provide other reasons to ban crypto. We are happy to tell you what the main reasons for banning crypto can be.

Government loses control

Perhaps the main reason is that governments lose control when the majority of the population switches to crypto. Crypto is a replacement for the monetary payment system. The monetary payment system is a payment system that governments and banks can influence. For example, within a monetary payment system, a government can choose to print extra money in the event of a crisis. Or to replace the banknotes with new banknotes.

Crypto is a means of payment that eliminates intermediaries. Banks and governments will then no longer be able to influence the economy. A government can have various reasons not to lose this control.

Unable to rescue the economy from the crisis

When the government no longer has control over the economy, the government cannot help the economy out of a crisis. Normally, a government would print money when we live in a period of economic downturn. In this way there is enough money in the economy that can be reinvested. The government’s control ensures that companies do not suffer too much from the economic crisis.

When a country uses crypto, the government cannot influence the economy when the country is in crisis. Governments often want to help the economy to provide the best prosperity. In the case of crypto, a government cannot succeed in achieving this goal. The fear that crypto will replace the monetary payment system and that the government will not be able to rescue the economy from a crisis is therefore a reason for many governments to ban crypto.

Payment defaults and corruption are a thing of the past

If a government itself also has to switch to crypto, payment defaults and corruption are a thing of the past. The entire population will then be able to see where government expenditure is going. This is of course a nightmare for corrupt governments. The rule of law and other countries can then impose sanctions if it appears that non-payments have occurred. This is also the reason why many countries where the government is suspected of corruption have banned crypto.

More criminal practices

A government may also fear that the number of criminal, drug and money laundering practices will increase when crypto is used as a means of payment. It is (almost) impossible for a government to find out where transactions come from and where they go. This makes it less easy for criminals to be tracked down and punished.

Banks now report to governments when unusual transactions take place. Banks and other authorities can then investigate these transactions, after which the possible perpetrators can be punished. With crypto this is therefore not possible in the current way.

Population can lose money

When Bitcoin became popular in 2017, crypto also caught the attention of the members of the Dutch House of Representatives. Many MPs were not happy with the rise of cryptocurrencies such as Bitcoin and Ethereum. One of the reasons they gave for this was that cryptocurrencies are dangerous because people can lose a lot of money with them. In this case, trading crypto was compared to investing in shares, but in a market that fluctuates way too much.

The population could lose a lot of money with this because crypto would not be stable enough to invest in. That is why some MPs wanted the government to impose a ban on crypto. That ban was of course never introduced in the Netherlands.

Too much risk for companies

Governments may also find crypto too much of a risk for businesses. It is therefore very difficult, for example, as a crypto company in the Netherlands to register with a bank. Banks believe that the risk these companies run is too great. Applying for a loan is therefore (almost) impossible.

It is seen as a big risk because the price of crypto is too unstable according to banks. This makes it difficult to assign a value to crypto. The value of a company can also be halved from one day to the next. Because the government has no control over the value, the government cannot take drastic measures.

Are there already countries that have banned crypto?

There are already several countries in the world that have banned cryptocurrencies. These countries all have their own reasons for this. In the African countries of Morocco, Algeria, and Egypt, it is illegal to own or trade crypto. If you do, you can expect a punishment.

A number of American countries (Canada, Bolivia, Colombia and Ecuador) have already included some rules and restrictions on crypto in the code. However, the penalties for these countries are not so severe. Unfortunately, this is not the case in all countries.

In Bangladesh (Asia), you can get a prison sentence of 12 years if you are caught possessing and trading Bitcoin. You will therefore hardly encounter anyone here who owns Bitcoin. The penalty against this is simply too severe.

Other countries that have imposed some form of ban on cryptocurrencies include Saudi Arabia, Jordan, Iran, Nepal, Pakistan, Vietnam, Cambodia, China, Taiwan, and Indonesia.

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