Trading cryptocurrency has been outlawed in several countries, the most prominent of which is China, with the People’s Bank of China warning that businesses that operate on virtual currency are illegal. This announcement came as a shock to the whole world as China is one of the largest cryptocurrency markets in the world. The announcement led to a drop in the price of Bitcoin, one of the most popular cryptocurrencies, by over $2,000. This wasn’t a spur-of-the-moment decision by the Chinese government. It was a decision made due to concerns over cryptocurrency being used as a means to launder money.
The crackdown on the trading and mining of cryptocurrency in China is pretty significant due to the prevalence of crypto in those parts.
The crackdown on the trading and mining of cryptocurrency in China is pretty significant due to the prevalence of crypto in those parts. The mining of cryptocurrency requires inexpensive electricity, and China, being one of the regions with the most economical electricity charges, became a haven for miners. With mining of cryptocurrency illegal in China, miners have had to find other locations for their mining activities.
Not all governments are averse to the trade of cryptocurrency though. India’s Prime Minister for example has come out to speak openly in support of cryptocurrency.
What Narendra Modi Says About Cryptocurrencies
Delivering a speech at the Sydney Dialogue, a forum for new cyber technologies, Narendra Modi, the Indian Prime Minister, spoke on India’s modern institution strengths. He believes that the implementation of technology in a nation is connected to the values and vision of that nation. Speaking further on the IT strengths of the Indian nation, he brings to remembrance the y2k computer bug and India’s role in helping to solve the problem. His belief that the extensive use of technology could greatly advance the good of the public made him urge democratic nations to unite to empower their citizens in preparation for the opportunities available in the twenty-first century.
PM Narendra Modi urged nations to develop the means to provide regulation and rules for the exchange of cryptocurrency which would help to promote the use of crypto for transactions and investments. He ended his speech by imploring democratic nations to put in the effort to prevent cryptocurrency like bitcoin from falling into the wrong hands. One of the steps the Indian government is expected to take according to India crypto news to regulate the trade of cryptocurrency is to make only approved crypto trade legal.
How Cryptocurrency Can Help Developing Countries
Cryptocurrencies were invented to help simplify and revolutionize the way value is traded and saved. They have been found to be a more accessible medium of value exchange than regular financial institutions. Cryptocurrency helps to make financial exchange available for those without access to banking solutions. This is due to the fact that the exchange of cryptocurrency can be done using just a mobile phone.
Studies have revealed that almost a quarter of the world’s population cannot access banking facilities. Cryptocurrency could be the way out for these people to make their own contribution to the economy. The financial inclusion that cryptocurrency affords will help create jobs which will then help the populace make more money and even save towards a better future.
The majority of the world’s population without access to financial institutions can be found in developing nations. These nations however have a very large population of young and tech-savvy individuals who can make good use of cryptocurrency. Studies have revealed that mobile phones are much more common in African states than electricity. This popularity of mobile phones can be leveraged to aid the transaction of value using cryptocurrency. This trend can also be found in various developing regions of the world like Indonesia and India. Like the Indian Prime Minister noted in his speech, India is a fertile ground for IT talents.
Reports have revealed that India is one of the countries with the highest rate of cryptocurrency adoption. This is despite the lack of regulations on the use of cryptocurrency. This could be due to the decline in the value of the Indian rupee over time which was further aided by the onset of the coronavirus pandemic and ensuing lockdown. Almost 10% of India’s GDP is from its IT marketplace. The use of cryptocurrency in such markets will help liberate merchants from the high fees and sluggishness of regular financial institutions.
Why Cryptocurrency Needs To Be Regulated
- To protect investors
The prices of cryptocurrency, like other financial assets, are highly volatile. Crypto market prices see a lot of fluctuations over the years. Regulation is needed so that investors can better understand the potentials and risks of crypto in order to make better decisions on which cryptocurrencies to invest in.
- Security issues
Although trading cryptocurrency like Ethereum on ethereum trading platforms such as Redot adds a level of security to crypto transactions, regulations on crypto will help to further secure the market. This will also help crypto-traders stay secure from attacks by cybercriminals and hackers.
- Illegal use
The decentralized nature of cryptocurrency makes it an enticing platform for criminals to carry out transactions. From the purchase of goods on the dark web to money laundering, cryptocurrency has become the favorite currency of criminals. Regulations such as the registration of real identities on crypto trading platforms such as Redot can help cut down on crimes committed using crypto as tender.
- Technological risks
Cryptocurrency has to keep up with advancements in technology in order for it to stay relevant. This way investors do not wake up someday and find their blockchain wallet empty because digital assets are no longer relevant. Government regulations will help investors better understand the structure and technological risks involved in cryptocurrency trading before they make decisions.
Cryptocurrency has obvious advantages for growing economies. The evils of an unregulated financial market are however plain for all to see. This is why countries have to join hands to make sure cryptocurrency is being utilized in the proper way.