Cryptocurrency has experienced a series of crackdowns since its full operation. In February, Nigeria, Africa’s most populous country, placed a ban on crypto with directives that bank accounts that are linked to cryptocurrency websites should be banned. This created a huge uproar within the country, especially on social media. However, crypto enthusiasts found a new way to trade cryptocurrency through P2P trading, and the rest has been history.
Amid the crypto bull run that occurred in the beginning of 2021, China dealt another huge blow on Bitcoin trading and mining towards the end of May, which plunged bitcoin by 30%. This largely contributed to the crash that the crypto world is currently experiencing.
Just last week, the UK Financial Conduct Authority (FCA) ruled that Binance, the world’s biggest cryptocurrency exchange, cannot conduct any “regulated activity” in the UK. This and some other government regulations have been issued in a bid to clampdown on crypto trading and investment. Same goes for South Africa, Bangladesh, Iran, Nepal, India, Denmark and a host of other countries.
Reasons Behind The Crypto Clampdown
China’s clampdown on cryptocurrency is not only due to the need for the government to “ensure financial stability”, it is also due to the Chinese Communist’s party aversion to risk or anything outside its control. China hosts about 75% of the world’s Bitcoin mining capacity. The amount of energy that is required to mine Bitcoin keeps increasing as each halving occurs. According to a report published in the report of carbon emissions by 2024, which means that if the global mining industry were a country, it would be the 29th largest power consumer. This projection opposes Chinese President Xi Jinping’s promise to make China a carbon neutral country by 2060.
Nigeria banned cryptocurrency by simply stating that it is illegitimate. South Africa previously banned crypto trading, but made moves to regulate the asset. Binance, on the other hand, has been banned in the UK due to the company’s failure to make a formal registration.
Is the clamp down a move to secure the lane for fiat currencies?
Usually, money in one’s bank account is often used by banks to “run their business.” They give bank savings out as loans and earn huge profits through interests. The advent and popularity of cryptocurrency has reduced the amount of money saved in bank accounts thereby, reducing the incidence of bank loans. This unstated reason contributes to the hasty decision behind clampdown on cryptocurrency in most countries.
Despite unfavorable rules that aim to disrupt the activities of traders and investors, cryptocurrency keeps thriving. Apart from the recent crash that occurred as a result of China’s crackdown and Tesla’s moves to stop accepting Bitcoin, the governments’ policies have had little or no effect on market adoption. Nigerians by-passed the policy by simply using the peer -to- peer exchange. Britons make use of VPN to change their locations in order to keep using Binance. In fact, Bitcoin rose by about 15% since the UK FCA made the announcement.
As it is widely believed ‘Bitcoin is the new Gold” if Bitcoin manages to surpass all forms of pressure that are mounting it, then, nothing can suppress it. The simple rule of movement in price applies; when Bitcoin rises, other coins are bound to increase. However, when Bitcoin falls, others will follow.