At the onset of the cryptocurrency revolution which began with Bitcoin, China seemed to be leading the way almost on all fronts. The country had a considerable monopoly on Bitcoin mining with large-scale mining facilities dotted across the country. So large was the country’s influence on Bitcoin mining that it led to fears of centralization with other large-scale miners seemingly unable to compete. The cryptocurrency trading and ICO markets were also buoyant as well. A few mainland Chinese exchange platforms were among some of the largest in the world.
Then came September 2017 and the blanket ban placed on ICOs and cryptocurrency exchange platforms within the country. This move had a sweeping albeit temporary effect on the global crypto market as prices fell considerably for a few days. Not too long after that, reports began to emerge that the government was considering imposing restrictions on Bitcoin miners. These restrictions are going to be in the form of regulations that will reduce the power consumption of these large-scale Chinese Bitcoin mining facilities. Just earlier this month, the Chinese government took it a step further by banning over-the-counter (OTC) cryptocurrency exchanges and foreign crypto trading platforms. This had been the only avenue for many Chinese crypto traders to access the market after the September 2017 ban.
As a result of these actions, the dynamics of the global cryptocurrency market has changed considerably. Many crypto trading businesses that were either domiciled or based in the country had to look for other markets. Binance, a crypto trading platform which had been established just a few months prior to the crypto ban in China is one such example. The company was both based in China and had a strong focus on the country’s crypto market. Many platforms moved to other countries, with Japan being a popular destination for many. Since the emergence of stricter regulations from China, there have been indications that other countries are looking to follow in the same manner.
The following are a few countries that could quite possibly follow China’s lead in banning cryptos.
Over the last couple of decades, South Korea has established itself as a tech-savvy country. The Asian country leads the way in many technological fields with some of the most popular tech brands. With such a technologically aware population, it was not surprising when Bitcoin and crypto trading became a big thing in South Korea. Numerous exchange platforms were established in the country as the population caught the crypto bug.
After the Chinese ICO and crypto trading ban, South Korea became an even more important country in the Asian crypto theatre. Some platforms moved their business from China to South Korea and the market began to blossom. The stellar year that cryptos had in 2017 reflected in the country’s crypto market as new trading accounts were being opened on a regular basis.
In December, the government began making serious moves to regulate the market. It instructed crypto platforms to stop opening new trading accounts. This led to widespread reports of an impending crypto ban. In the early days of 2018, speculations reached a fever pitch with several “reputable” crypto news sources claiming the government was going to shut down crypto operations within the country. There had been a few police raids against a number of crypto trading platforms on account of tax evasion, money laundering, and sundry financial crimes.
There was an immediate backlash from the population against the news that the government was going to ban cryptos. South Korea is a nation that is battling corruption scandals in both the business and political arenas. It is the opinion of several stakeholders in the country’s government that the crypto market presents an avenue for financial crimes, hence, the need for regulations. The situation within the country is still an ongoing one but South Korea could very well ban cryptocurrencies.
Another compelling reason why South Korea may ban cryptocurrency has to do with the threat from its neighbor, North Korea. South Korean crypto exchange platforms have reportedly been hacked on numerous occasions by suspected North Korean hackers. Reports out of Pyongyang say the government of North Korea is looking for creative ways to get around the crippling economic sanctions imposed on the country. South Korean government officials could view banning cryptos as a necessary evil to prevent their neighbors from getting access to funds for their nuclear program.
France like many other European nations didn’t have any specific regulations on cryptocurrencies up until recently. Early this year, officials of the French government announced plans that they were creating a working group to develop appropriate regulations relating to cryptocurrency. Heading the group is a known Bitcoin skeptic who once wrote a scathing indictment of Bitcoin, calling it a haven for tax evaders and money launderers.
This is perhaps the overwhelming sentiment behind the French government’s desire to regulate cryptocurrencies. The threat of crypto being used to funnel money for terrorist funding, tax evasion, and money laundering is something that greatly troubles many governments around the world. France has in recent years suffered a number of devastating terrorist attacks. With the fear of terrorist groups taking advantage of the anonymous nature of cryptos to fund their illegal activities, the French government could ban cryptos.
The move by the French government is part of a larger plan by the EU to introduce stricter crypto regulations within the region. A resolution passed by the European Parliament and the European Central Bank called for the adoption of tighter crypto regulations. The resolution is currently being ratified by EU member countries. France and Germany also plan to convince the G20 to adopt measures for regulating the crypto market. Leaders of both countries have pledged to ask Argentina (the current head of the G20) to bring up the issue during the next summit.
Of the 3 countries examined in this article, India seems the least likely to ban cryptos but there are indications that regulations are imminent. A draft proposal has been submitted for consideration, though no timetable for implementation has been released. On numerous occasions, the Reserve Bank of India (RBI) has issued dire warnings against participating in cryptocurrency trading. Some major banks in the country have even frozen the accounts of a number of crypto trading platforms on account of suspicious financial activities.
The 2016 demonetization of the Indian currency that saw the Rs 1,000 and Rs 500 notes being withdrawn from circulation was a strong indication of the country’s strong monetary policy. If the government does deem cryptos to be a threat to the financial stability of the country as has been suggested by the RBI, then a ban might happen.
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