The cryptocurrency march around the world has been quite impressive, so have bans on trading and conducting any operations with crypto imposed by certain governments.
According to some sources, the cryptocurrency market lost more than $300 billion within one month after Chinese authorities prohibited all activities related to trading cryptocurrencies via domestic and foreign cryptocurrency exchanges, as well as ICOs. Vice-president of South Korean cryptocurrency exchange Bithumb, Lee Jeong-ah told The Korean Times that “after the non-anonymous trading ban was introduced in the country, the daily transactions of cryptocurrencies plummeted to around 400 billion won from 4 trillion won.”
Some countries have been especially tough on cryptocurrency transactions: the participation in any kind of cryptocurrency transactions may result in a jail sentence in such countries as Nepal, Bolivia, Bangladesh, and Algeria.
While these measures definitely have a negative impact on the market volume, create difficulties for cryptocurrency investors and startups, they may eventually lead to a U-turn for cryptocurrencies.
What are the results of bans or stricter regulations, like those currently discussed by US authorities who may want to classify cryptocurrency coins as securities?
First, crypto exchanges and blockchain companies will flee to more favorable jurisdictions, like Binance and OkEX have already done. Both the exchanges have announced their decision to settle down in Malta, which has been trying to offer favorable conditions to such companies. Maltese authorities are developing a special framework and legislative requirements, including the establishment of the Malta Digital Innovation Authority focused on encouraging growth in the area and ensuring the legal character of such business. Switzerland and Gibraltar, for instance, are also crypto-friendly and offer legally viable and reliable frameworks for crypto companies. So if crypto companies flock to certain destinations, which can support their business and guarantee asset protection to their customers, this will be a step forward to cryptocurrencies, as it will boost investor confidence in the industry and eventually push crypto prices up.
Second, bans and tougher regulations, no matter how hurtful they are for the crypto industry right now, will eliminate lots of scams from the market. Crypto prices falling due to bans make operations in this industry less profitable and reduce the number of participants who got involved only to fill their pockets and run away. Also, governmental obstacles and high penalties (for instance, fines for unregistered crypto activities in Thailand may amount to over $15,000) also make this industry considerably less attractive for scammers.
So those who say that measures taken by governments and central banks will lead to extinction of cryptocurrencies — that is not true. What they will result in is the creation of established and reliable jurisdictions featuring favorable conditions for crypto companies, a considerable reduction in the number of scammers and, in the end, a better investment climate and higher cryptocurrency prices.