What Are the Reasons Behind Countries Banning Cryptocurrencies?

Cryptocurrencies have been met with a variety of reactions around the world. While some nations have embraced digital assets, others have taken a more cautious approach. This is due to a range of factors, including the volatility of cryptocurrencies, their decentralized nature, and their potential to disrupt existing monetary systems. Additionally, some countries are concerned about the potential for cryptocurrencies to be used for illicit activities such as money laundering and drug trafficking.

On August 27th, Yin Youping, deputy director of the Financial Consumer Rights Protection Office of the People's Bank of China (PBoC), referred to cryptocurrencies as speculative assets and warned people to protect their pockets. This statement reflects the Chinese government's stance on cryptocurrencies.

Iran

has a complex relationship with cryptocurrencies. In an effort to evade crippling economic sanctions, Iran has turned to bitcoin mining as a way to finance imports.

To allow the cryptocurrency industry to flourish, Iran has offered licensed miners cheap energy, but requires that all mined cryptocurrencies be sold to the Central Bank.

North Macedonia

is currently the only European country that has imposed a total ban on cryptocurrencies. This means that spending, trading or investing in cryptocurrencies is completely illegal. The national bank of North Macedonia has declared that cryptocurrency-based activities are associated with criminal activities and that the unregulated nature of cryptocurrencies makes them a financial risk.

China was once home to the largest number of Bitcoin miners in the world. However, in 2017, China banned all cryptocurrency-related activities. The reason for this decision remains unclear, but it is believed that it was made in order to reduce energy prices and greenhouse fuel emissions associated with cryptocurrency transactions. As a result, the value of bitcoin plunged by more than 5%, while other digital currencies also traded lower on the day. Other countries such as Turkey, Iran, Algeria, Bolivia, Colombia, Indonesia, Nepal and North Macedonia have also banned or restricted the use of cryptocurrencies in recent times.

However, as cryptocurrency gains momentum around the world, this is beginning to change. For example, El Salvador has officially adopted the use of Bitcoin. In Vietnam, cryptocurrencies are not directly banned; however, no form of cryptocurrency (be it Bitcoin, Ether, etc.) can be used. Cryptocurrencies have been met with mixed reactions around the world. While some countries have welcomed digital assets with open arms, others have taken a more cautious approach due to various factors. These include the volatility of cryptocurrencies, their decentralized nature and their potential to disrupt existing monetary systems.

Additionally, some nations are concerned about the possibility of using cryptocurrencies for illicit activities such as money laundering and drug trafficking. The Chinese government's stance on cryptocurrencies was made clear when Yin Youping - deputy director of the Financial Consumer Rights Protection Office of the People's Bank of China (PBoC) - referred to them as speculative assets and warned people to protect their pockets. Iran has a complex relationship with cryptocurrencies due to its efforts to evade economic sanctions. To allow the cryptocurrency industry to flourish in Iran, licensed miners are offered cheap energy but must sell all mined cryptocurrencies to the Central Bank.

North Macedonia is currently the only European country that has imposed a total ban on cryptocurrencies - making spending, trading or investing in them completely illegal. The national bank of North Macedonia believes that cryptocurrency-based activities are associated with criminal activities and that their unregulated nature makes them a financial risk. China was once home to the largest number of Bitcoin miners in the world but banned all cryptocurrency-related activities in 2017 for reasons that remain unclear - though it is believed this was done in order to reduce energy prices and greenhouse fuel emissions associated with cryptocurrency transactions. As a result, bitcoin's value plunged by more than 5%, while other digital currencies also traded lower on the day.

Other countries such as Turkey, Iran, Algeria, Bolivia, Colombia, Indonesia, Nepal and North Macedonia have also banned or restricted the use of cryptocurrencies in recent times. However, as cryptocurrency gains momentum around the world this is beginning to change - El Salvador has officially adopted Bitcoin as legal tender for example - while Vietnam does not directly ban cryptocurrencies but does not allow any form of them (Bitcoin or Ether) to be used.