A short history of crypto regulation and why it won’t matter soon
Crypto and banking, banking and crypto — two vastly different worlds that don’t exactly play along, or at least haven’t until now. Two iterations of finance, both equally important in the current state of affairs, but still separate, split into their own domains.
Cryptocurrencies, Bitcoin especially, have had quite the relationship with centralized authority and regulators, with the latter dead set on putting a leash on this still new type of asset or just completely banning it in its respective jurisdiction. The latest development in this saga came just yesterday.
This toxic relationship between authority and cryptocurrencies, which by design and nature should be free of centralized control and regulation, has produced mixed results, but not for want of trying. Countries on all continents have tried to halt or limit the spread of crypto and its run towards mass adoption as a new form of money. These are just a few examples of a long, long list.
At the very beginning of 2020, Qatar went on with its plans to completely ban cryptocurrency trading, citing money laundering concerns and updating its AML policy to include the new asset class. Qatar authorities also stated that the ban came in order to “ensure the safety of the financial and banking system” of the country, which, of course, begs the question — if innovation endangers a system, should that system continue to exist in its current state? Let’s move on.
In September 2021 the People’s Bank of China proceeded to ban all cryptocurrency transactions, stating that anonymity and traceability issues may contribute to financial crime and money laundering. Again, as we saw was the case with Qatar, China also cited fears that the traditional financial and banking system of the country will be undermined by crypto, and the way to prevent that was through state intervention. Another reason for the ban may be that crypto transactions facilitated capital leaving the country and making their way to foreign accounts — another win for crypto and the everyday user, who benefits from increased freedom of choice when it comes to finance. Moving on.
A year back, in April 2021, the Central Bank of Turkey also banned cryptocurrencies, including Bitcoin, as a form of payment, stating that the risks behind anonymity and traceability are far too great for the country to encourage. This came at a time when inflation in the country was soaring, not to mention the Turkish Lira losing 44% of its value in 2021 alone after questionable decisions by the Central Bank.
Russian state authorities have claimed for years that cryptocurrencies pose a significant risk to the traditional financial system in the country, and have made several attempts to limit their spread and adoption. Money laundering, financing terrorism, danger to financial stability are but a part of the accusations thrown at crypto. Crypto was thus banned as a legitimate means of payment in 2020, and subsequent proposals to completely ban cryptocurrency exchanges followed. Owning crypto was, however, left unregulated, but what good is that?
In the latest episode of Bitcoin vs The World, which aired yesterday, a proposed bill in the State of New York envisions a ban on proof-of-work mining for a period of at least two years (if passed). Such a ban, of course, would hit Bitcoin miners the hardest, seeing as BTC is the most popular of all PoW currencies.
The bill cites environmental concerns regarding electricity consumption by mining rigs, even though the traditional banking system and gold industry consume more than twice that much, as reported by NASDAQ. Bitcoin consumes 113.89 TWh per year, as compared to a whopping 263.72 TWh per year on banking and gold’s account.
So, if that’s not the case, could it be that “financial stability” is at stake here as well? Could it be that the traditional banking system is just not ready to make the leap? Remember one Italian bank’s threats to close accounts of users that meddle in crypto? It is not the only one.
A pattern is forming across the globe.
Where we’re going, we don’t need banks… kinda
The banking system is firmly rooted in our society and will continue to be so for some time to come. But innovation cannot be stopped, and cryptocurrency is not going anywhere, on the contrary — it’s here to stay.
We cannot get rid of either, and we cannot stop change, nor should we. The seeds have been sown, so what we need instead is a new model — a bank that embraces crypto, that puts crypto at its core, and builds a bridge to the world of DeFi. A crypto-friendly bank, so to speak.
We’re not crypto-friendly — we’re in love with it.
This is the ChangeX vision for the future of crypto, the financial system of old, and the entirety of finance — one place for everything, one domain for traditional and digital.
We’re taking on a new approach, where banking is seamlessly integrated into DeFi, and where their communication is constant. The world of yesterday meets the world of tomorrow, creating a beautiful synergy and doing so with unprecedented simplicity.
We still need banks. And we need crypto. That’s why we’re building the bank of the future, and crypto is its beating heart.
Join us — our ICO continues until May 31 with the CHANGE token fixed at $0.016.
Thanks for reading,
The ChangeX team