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Highlights
- According to a report by the Library of Congress (LOC), the number of countries that have banned crypto has more than doubled since 2018
- The countries with current absolute bans are Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh and China
- The incidence of nations banning crypto shows little signs of slowing down, with several jurisdictions currently looking at potentially restricting the use or mining of digital currencies
The last two years have seen cryptocurrency move further into the mainstream, with a particular spike in popularity throughout 2021. Despite this, last year saw tougher regulations worldwide on crypto with several countries banning digital currencies altogether.
In fact, according to a report by the Library of Congress (LOC), the number of countries that have banned crypto has more than doubled since 2018, with nine jurisdictions putting an absolute ban on the space and 42 jurisdictions imposing an implicit ban. In 2018, there were eight jurisdictions with absolute bans and 15 with implicit bans.
A Look at The Bans Around the World
The countries with current absolute bans are Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh and China. These countries have absolute bans, meaning that it’s considered criminal activity to transact or even hold cryptocurrency.
Implicit bans, on the other hand, outlaw crypto exchanges and any institutions offering services pertaining to crypto.
Aside from the 51 jurisdictions who’ve imposed crypto bans, almost double have applied restrictions in an effort to combat money laundering and terrorism funding, which certain governments believe the crypto space lends itself to. This is three times the amount seen just three years ago.
Image Source: © Rastudio | Megapixl.com
China’s Regulatory Battles
Last year saw the Chinese government imposing ever tightening restrictions on crypto trading and crypto mining, which culminated in absolute ban in September.
Before that, there had been phases by which the Chinese authorities had clamped down on the crypto space. In May, the country announced that it would prohibit any financial institutions from making crypto transactions.
Then in June, authorities put a stop to all domestic crypto mining, which was a significant blow to the market considering the sheer amount of crypto mining that occurred throughout China at that time.
Then in September, a number of government agencies pulled together to stamp out any form of crypto trading.
One of China’s reasons for applying an absolute ban were its concerns about how crypto mining was having a harmful effect on the environment. Concurrently, Tesla founder and Chief Executive, Elon Musk, also scrutinised Bitcoin’s mining practices for its excessive use of fossil fuels, ceasing the electric vehicle company’s acceptance of Bitcoin in exchange for their products.
Many pointed towards these two events – Musk’s announcement and China’s regulations – as catalysts for 2021’s mid-year crypto crash, which saw around US$1 trillion wiped off the market in a matter of weeks.
The other reason for China’s crypto discontent was the government’s view that cryptos like Bitcoin have no inherent value. They also cited the space’s potential to be used by criminals to launder money, which is a sentiment that has been echoed by other countries that have placed various crypto bans in the past few years.
The Future
The incidence of nations banning crypto, whether it be an absolute ban or an implicit ban, shows little signs of slowing down, with several jurisdictions currently looking at potentially restricting the use or mining of digital currencies.
Estonia is in the midst of redefining what a virtual asset service provider (VASP) is as well as applying an implicit ban on decentralised finance (DeFi) and Bitcoin.
Additionally, India’s government stopped short of an absolute crypto ban last year. However, Indian authorities have gone ahead with imposing regulations on the crypto space.
The Bottom Line
Perhaps it was inevitable that as crypto gained in popularity, there would be an equal resistance to that change. After all, the guiding philosophy of cryptocurrency is in total opposition to the traditional financial system. The question is, can these two systems live side by side as we head into the future? Or is one destined to devour the other? Watch this space.
