Why Are Governments So Anxious About Cryptocurrencies?

While cryptocurrencies – the largest faction being Bitcoin – are

regularly gaining popularity with the general population, governments

around the world are becoming increasingly worried. Typically,

conventional currencies associated with specific countries are

regulated by the government, essentially so that they can dictate,

track and monitor.

Value is given to a specific currency, and the residents of that country

must adhere to all of the regulations, simply because governments

possess the power. Now, if organizations other than the government

are immersing their own currency into society, it cannot be treated

like a government-issued currency.

So, taking all that into consideration, it’s no wonder the officials are so

anxious. Let’s consider each aspect of cryptocurrency that puts fear

into the heart of governments from practically every nation.

Loss of Control

For a government to lose a certain degree of control over something as

crucial as currency, which has a direct impact on the overall economy,

it’s very challenging for them to deal with. As cryptocurrencies are

peer-to-peer networks, it places some control into the hands of the

people of the country, and therefore, challenges the control of the

government. As Bitcoin has become more popular globally,

governments are feeling insecure about their ability to control their

economy’s currency.

Hard to Regulate

Cryptocurrencies aren’t actual forms of money, it’s just software on a

computer drive. That, along with identities being hidden and

Blockchain technology being publicly-accessible, creates a difficulty

for governments when trying to regulate it. What makes it harder is

the fact that even though it’s just software, it’s often used to make

purchases and complete transactions, which are also features of real

money.

Worry of Illegal Activity

A valid worry for governments is the risk of illegal activity involving

individuals with hidden identities. For example, if people are using the

anonymity of Bitcoin to deal drugs, launder money, traffic children, or

fund terrorism, then people say that demands some serious attention.

Another aspect of crime, which we’ll touch on next, is the problem of

tax evasion.

Limited Taxability

It is no secret that a large chunk of a country's economy is from the

taxing system that a government puts in place. Now, as we've already

mentioned, cryptocurrency isn't classed as actual money, so it can't be

taxed in the same way. However, it is considered an asset and is usually

taxed in the same way something like gold is. But, it's often questioned

if people actually declare the cryptocurrency they own.

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