Cryptocurrency has become a hot trend in the financial system. The introduction of all these digital currencies has not only brought shock to the government, but also a quiet rate of loss for the government. The main factor in any financial system is trust. Financial investments are not just what you think. Only with proper trust and patience, one can get what he wants. Today, Bitcoin stands in such a position in the hands of some Governments. You just need to open your crypto trading account to grow your money through Bitcoin. In this article, we will see more why some governments are not encouraging bitcoins in this Bitcoin Era.
Some governments are keenly watching the growth and fall of the Bitcoin financial systems. Though many people have accepted the strategies and presence of bitcoins, on the other hand, there are few people, especially the government, against bitcoins. The United States itself has so many questions pondering, regarding the Bitcoin financial system and is not accepting it as a legal form of investment. They state many reasons to justify the ignorance of Bitcoin into their financial systems. Though the reasons and justifications do not affect the Bitcoin Systems, only the stability in the digital currency can make people keep trust in it again.
Some of the main reasons why Governments discourage Bitcoin systems are because it is not regulated precisely, it can pave the way for many criminal or illegal activities, and most importantly Bitcoin makes people avoid capital controls.
In many countries, the standard rules in the financial systems can never be broken. For instance, the U.S. government takes in money only from the Federal Reserve Banks. The people in the financial web will encompass only lenders, borrowers, and consumers. Apart from this, the financial chain never breaks in between. The policies in the financial systems lie as a default method to be followed.
Is Bitcoin a threat to increase illegal activities?
As said, the government has various justifications why Bitcoin must not be encouraged. The government gets scared for criminal or illegal activities to increase because of Bitcoin. Bitcoin only accesses the user by the network address, and nothing more. So, even if there is a slight chance of any illegal activities taking place via Bitcoin, there would not be many traces of evidence left behind to accuse them. If you have heard about the Silk Road case, you would clearly get an idea why Bitcoin is still lagging in trust. The place was well-known for illegal drugs and guns. Unfortunately, bitcoin was also involved in the transaction processes. This directly or indirectly became a part of the criminal and illegal activity to take place. They made harsh roads for the Government to trace the criminals since it had only blockchain addresses as evidence. As a result, a penalty of 174000 BTC was given.
A non-regulated source:
Another reason why the Governments are keen on shutting down bitcoin is that Bitcoins are not regulated. Though Bitcoins came into existence over a decade ago, proper regulations have not yet been given by the government. When cryptocurrency regulations were altered, there were so many questions arising. For large-scale investments like traders, non-regulation is still an obstacle.
No assurance for transparency?
Also, the Bitcoin system does not tend to follow a completely transparent plan or strategy. This factor has made the governments still doubtful. Though Bitcoin has many reasons to survive in the financial systems, there are a few disadvantages too. With so much proof and evidence, the government has concluded that such non-transparent financial systems cannot be encouraged for us. There were many scams reported, indirectly dragging the name of Bitcoin. As per the SEC 2018 letter, it was stated that the absence of transparency will bring heavy losses in the current financial systems. In conclusion, though there are so many ways and strategies to bring up the stability of Bitcoin systems, these disadvantages must be cleared first, to get a stable position in the Government.
