The world’s banks are persuading governments to act against crypto in an effort to prevent it from becoming a new global currency system. Regulators worldwide are almost coordinating to impose heavy regulations on the trade, ownership, taxation, and custody of crypto. Today, the Malaysian government formally declared digital assets as securities. New regulation treating cryptocurrencies as such take effect immediately. By doing so, Malaysia did what other countries want to do but so far haven’t acted on it – to gain control of Bitcoin. This decision will likely encourage further action against the unregulated crypto market. India is on the verge of banning crypto activities in the country, and the U.S. is deliberating on how to classify them. This prevailing attitude will likely unite governments to identify Bitcoin as a new market but one that needs to be controlled.
A Threat and Opportunity
Bitcoin represents change at a global scale; the end of centralization of power and finances. It democratizes people’s abilities to interact with each other and transact without expensive intermediaries. To the banking system, Bitcoin poses an existential threat; a revolution that can do away with crippling fees and interest rates. On the other hand, it also represents opportunity; the creation of new markets with borderless access. New opportunities for commerce, eduaction, data management, innovation, discoveries, etc. Therefore, governments view crypto akin to nuclear technology; dangerous but useful. Instruments that require the highest level of control and security.
The Cyberspace Administration of China’s (CAC) enacted crypto measures that become law tomorrow, January 15, 2019. This suggests the possibility that both governments were discussing regulatory approaches and coordinating dates to implement them. In addition, Bulgaria, Denmark, Spain, India, the U.S., and others are also exploring new tax regulations to curb tax evasion. China has gone so far to require monitoring and identification of users.
After ten years everyone has learned that Bitcoin cannot be destroyed. Unfortunately, people also discovered that it can be profitable if properly controlled. Therefore, that’s exactly the course of action the powers that be are taking in the future. Rather than aimlessly fighting it, the governments will institutionalize it and regulate it so that it poses no danger to the establishment.
Sadly, this means that the chance for retail investors to profit will be taken away. Under strict control, prices will be fixed and profits distributed in the same way as stocks and other securities. And from the same banking institutions that control money today. In other words, investors will have to play by the same rules set by Wall Street and receive meager returns/residuals over a lifetime of investing. So, Bitcoin will be allowed to exist but to the benefit of the very people that it was supposed to replace.