Countries like Vietnam have threatened that accepting payments in cryptocurrency will incur heavy fines. Israel is looking to ban digital currency–based companies from trading on the Tel Aviv Stock Exchange.
Threats of a cryptocurrency trading ban in South Korea follow actions taken by smaller economies concerned with the social cost of the new investment vehicles. Algeria, Morocco, Bolivia, Ecuador, Kyrgyzstan, Nepal and Bangladesh have all issued bans—or at least begun the process—on bitcoin and other alternative currencies, in order to stamp out tax evasion and irresponsible trading.
Indonesia meanwhile, rather than banning crypto outright, has warned investors against selling, buying or trading it. China has declared initial coin offerings illegal and plans to cut off domestic access to platforms and exchanges that enable people to trade digital currencies. Vietnam has threatened that accepting payments in cryptocurrency will incur heavy fines, and Israel is looking to ban digital currency–based companies from trading on the Tel Aviv Stock Exchange.
Meanwhile, People’s Bank of China has been studying the potential for a central bank digital currency since at least 2014, when the bank set up a digital currency research group, which was launched officially last June. Sovereign cryptocurrencies are yet another threat.
FinTech Forum co-founder Frank Schwab says bans will come unstuck technically and behaviorally, much like prohibition of alcohol in the 1920s in the US. “My expectation is that the crypto world will be regulated more,” says Schwab. “To me, this would be a sign of increased maturity of a new market. After all, it looks like cryptocurrencies and blockchain are seen as relevant to the world.”
Sankar Krishnan, executive vice president for capital markets and banking at Capgemini believes that the volatility of cryptocurrencies today could have been better controlled if the crypto trailblazers took a more measured micropayments route that would have helped get risks figured out. A more measured approach, rather than a big bang, would, he says, have allowed central banks to warm to them more.
A Bundesbank board member suggests a united global regulatory front could oversee currencies with no single home market.