About 15 years ago, BTC was expected by Satoshi to become a currency, a crypto-currency, meaning that it could replace fiat in payments. Today, BTC itself and many other tokens are often seen as a store of value or financial instrument, their price appreciation brings profit to investors but that also means that fiat gradually depreciates against those tokens. Things get even more complicated when many people decide to store crypto like BTC, ETH and USDT instead of storing fiat because they believe that fiat is depreciating, while tokens will continue to appreciate.
This could really affect the role of fiat in the economy, undermining the economic control of governments through money printing. Depending on their perspective, different governments have different ways of behaving. The EU wants to regulate crypto so it has issued the MiCA law
[1], while China wants to ban crypto
[2]. The Nigerian government alone wants to have a whole drama related to crypto
[3].
Recently, after blaming crypto for the devaluation of the naira currency, the Nigerian government banned all crypto exchanges in Nigeria
[4]. In particular, the Nigerian government suspects that Binance is involved in a $26B illegal money flow that has negatively impacted the Nigerian economy. To address these suspicions, they have arrested two Binance executives and demanded information about Binance's users
[5]. Binance has denied any wrongdoing and has called for the immediate release of its executives. The company is cooperating with the Nigerian authorities in their investigation
[6].
This incident raises important questions about the regulation of crypto exchanges. Governments around the world are still grappling with how to best oversee these new and rapidly growing crypto companies. The Nigerian government's actions remind us of the potential for conflict between governments and crypto exchanges. I think Nigeria is just trying to suppress crypto with extreme and ill-advised behavior.
With its decentralized nature, crypto will continue to exist without the permission of governments. However, in order to develop and grow stronger, crypto also needs friendly access from governments around the world, otherwise things will become extremely complicated: when crypto trading and CEXs are banned, market liquidity will collapse, investors will not want to participate in the market, and the crypto market will lose potential investors and new money. DeFi and P2P can still exist, but the crypto market will not be able to develop as strongly as in countries that accept crypto.
Given the extreme actions and the state of the crypto market in countries like China and Nigeria, I am really worried that even though crypto cannot be destroyed, governments still have enough power to suppress and stifle its development in their countries. If this situation spreads to other countries and is imitated by other governments, things could be worse than we can imagine.
I hope that in the near future, major governments will soon accept crypto and issue a legal framework to manage and collect taxes on crypto income as a legitimate asset class. Extreme actions to attack the crypto market also need to be opposed and condemned by the crypto community.
I would like to know your views on the acts of repression of the crypto market:
- Can crypto continue to thrive without the support of governments?
- Do you think governments can suppress and restrain the crypto market with their power?
- If you were the head of government, would you accept or reject the crypto opportunity for your country?
References:[1]
MiCA, EU’s Comprehensive New Crypto Regulation, Explained[2]
China Never Completely Banned Crypto[3]
An overview of cryptocurrency regulations in Nigeria[4]
Nigeria targets cryptocurrency in bid to end naira freefall[5]
Binance Executives’ Detention Could Spark Diplomatic Crisis in Nigeria[6]
Binance says it trained investigators in Nigeria under government cooperation
Note:- My opinion was posted first in that topic, on Bitcointalk
- I leave the source link to avoid plagiarism accusation.
- I excluded/ included minor things from an original thread if necessary.