Cryptocurrency trading has become the order of today’s society. It has gotten acceptance by the young and the old, students and civil servants, as well as artisans and civil servants. The list goes on. In recent times, however, we have seen various governments moving against the trading of cryptocurrency by their citizens.
This leads us to the question: why do some countries ban crypto?
We will do justice to this question, in this particular article. This is our approach – first, we will take a look at those countries that banned crypto trading of any kind, and then expose the justification given by some of these governments.
Which countries banned cryptocurrency?
As of the time of writing this article, a lot of governments have officially banned cryptocurrency trading in their countries. The number keeps rising by the day. Other countries have placed some limitations on how their citizens use cryptocurrency.
Some of the countries with partial bans on crypto include but are not limited to Argentina, Taiwan, Iran, Colombia etc. For these countries, individual citizens are free to trade or mine digital assets. However, there a strict regulations on banks accepting payments in the form of digital assets.
According to reports, at least 19 countries have totally banned all forms of cryptocurrency trading. Prominent among these countries is China, which started imposing restrictions on cryptocurrency dealings as far back as the mid-2010. Subsequently, the Chinese government officially banned all platforms dealing in crypt in the year 2019.
Another notable country following the lead on the ban on digital assets is Nepal. As far back as 2017, the Nepalese central bank declared all transactions involving cryptocurrency illegal. The government issued strong warnings, with imprisonment as a punishment for citizens found wanting.
In Latin America, we have countries like Bolivia and Ecuador leading the ban on the use of decentralized cryptocurrencies as legal tender. The Bolivian central bank took this action in 2022. The restriction prohibits banks from using, trading, or marketing digital assets. This move was meant to protect the public from fraud, risks, swindles and losses associated with digital currency trading and mining. Ecuador’s move was specific. The country introduced its own CBDC, called the “Sistema de Dinero Electrónico”, banning all decentralized digital assets.
The African continent is also not left out of the trend. There have been outright bans by several countries, making cryptocurrencies illegal. For instance, Algeria prohibited crypto in 2018, Morocco in 2017. Other countries on the African continent that followed suit include Egypt, Libya, Nigeria, Lesotho, Ghana, Tunisia, and Sierra Leone.
Why do some countries ban cryptocurrency?
We have seen that several countries across the globe have placed restrictions on the use, marketing, trading, mining, or any transaction that has to do with cryptocurrency. However, the question remains – why do these countries ban cryptocurrency?
There are several reasons why the governments of these countries prohibit the trading or use of cryptocurrency in their respective domains. We are going to outline some of the reasons herein.
One of the main concerns of these governments is the fact that digital assets are detrimental to the stability of their domestic financial systems. What this simply means is that, since crypto is volatile, any crash or surge in the system can severely impact investors and financial institutions. This is a very important source of concern for these countries, hence the restrictions or total ban on cryptocurrency.
Another reason is to protect the rights of the consumer. Crypto markets lack security, hence making consumers prone to scams, fraud, and manipulation of some sort. Hence, these countries place bans to protect their citizens from falling victim to Ponzi schemes. Also, since the market is speculative, countries do well by protecting their citizens from losing their savings.
Then we have the fact that cryptocurrency transactions are difficult to trace, allowing citizens to easily evade tax. As more individuals use cryptocurrency, governments are losing money as few of these individuals or businesses return what belongs to the revenue purse of their governments. This is in addition to the fact that crypto has and can be used for money laundering and illicit activities due to the degree of anonymity involved in crypto transactions.
Wrapping it all Up
The fact that crypto has gotten wide acceptance and popularity as a decentralized currency for seamless transactions doesn’t mean that all countries welcome the idea. Governments around the world are changing their policies with this emerging trend.
Some governments have placed restrictions due to issues regarding consumer protection, financial instability, illegal activities and other vices associated with digital assets.
We have seen that even as crypto trading continues to gain widespread popularity, governments are concerned about finding the right balance between accepting innovation and curtailing associated risks.