Cryptocurrencies and State Financial Systems: Is There a Real Threat?

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Cryptocurrencies and State Financial Systems: Is There a Real Threat?
2018-11-02 in CRYPTOPEDIA

Bitcoin was created as a method of bypassing traditional financial institutions. It has also replaced the abstract notion of trust with the need for cryptographic evidence of a transaction.

When it became impossible to ignore the popularity and demand for cryptocurrency, central banks and other departments that ensure the implementation of a unified fiscal policy, began to point out a number of specific threats that, in their opinion, are borne by these electronic payment systems.

Read more about The risk of cryptocurrencies right now!

Major cryptocurrency risks

Are there any risks in the use of cryptocurrency for the country’s defense, is there a risk of a humanitarian catastrophe, the risk of national conflicts? Probably not. Perhaps the main concern of all governments is the possibility of using cryptocurrency for money laundering, financing of terrorists and other illegal operations. Moreover, the criminal world enthusiastically perceived the possibility of making remittances through cryptocurrency, which further complicated the law enforcement agencies to identify crimes and collect evidence of the transfer of funds.

“Work to counter the criminal use of cryptocurrencies is being conducted at the interstate level quite actively. Thus, on July 21, a new communiqué of the G-20 summit was released, the key message of which is that politicians will try to apply all the positive experience gained in the framework of the FATF to the world of cryptocurrencies. However, taking into account the peculiarities of the technology (pseudo-anonymity, or almost complete anonymity, as in the case of Monero, Zcash and a number of other coins), this will not be easy, ”said James Ross, a partner of the law firm Kirk and Leipzig.

Decentralized nature of cryptocurrencies

The decentralized nature of cryptocurrency is less discussed as a threat, but for the state it looks much more serious: if a cryptocurrency gains a certain weight, or rather capitalization, its course will significantly influence the country’s economy. This could potentially undermine the sovereignty and economic independence of the state.

Now the Central Bank fully controls the amount of money supply and, conducting emission, it receives money at its disposal, which is not the case with cryptocurrencies.

“It is not surprising that the Central Bank of China is so negative about cryptocurrency, calling it a“ money surrogate” prohibiting banks and legal entities from using it as a means of payment and exchange. And the limited issuance of cryptocurrency increases its value, therefore it can serve not only as a means of payment, but also as a way of investing that is comparable to gold, ”said Veronika Mosk, a lawyer at Dabres, Nents and Partners.

However, it should be noted that most of the fraudulent schemes are identified during an ICO stage. Do not forget about the largest ICO scam of Modern Tech in Vietnam, whose managers stole more than $ 660 million. Finding directors and money for investors deceived by law-enforcement agencies is difficult.

Bitcoin versus ordinary investments

Therefore, another vector of the work of regulators is the protection of the rights of ordinary investors from buying an outright scam. Many world regulators of the securities market have issued recommendations on this subject. However, it is well known that the chief “forest guard” is the US Securities and Exchange Commission (SEC), which has already been up in arms against a number of scam projects. From the last high-profile examples – the project Centra, whose founders are already imprisoned.

The third vector, of course, is taxes. The states are not ready to lose revenues from cryptocurrency operations. First of all, we are talking about exchanges, which began to earn fabulous incomes on their commissions. Next on the list are traders, miners and other participants in crypto-economics, who at the expense of sometimes furious volatility literally got rich in eyes.

Thus, all the positive features of cryptocurrency, ensuring its independence and reliability, turn into negative consequences for citizens and the state.

At the same time, citizens cannot be excluded from the process of transformation into the digital economy. Explaining a citizen about the risk of investing money in a cryptocurrency due to its volatility or anonymity is empty if a person does not understand how “it works.”

In general, despite all the risks that various government bodies see in cryptocurrencies, it is no longer possible to close their eyes to their popularity, demand in modern companies and widespread use as a means of accumulation and payment.

“The state is forced to accept regulation of this industry, almost making bets, like in a casino: those who put a ban, remove their risks now, but risk losing long, and those who create” legal cryptorium “should understand that if the potential risks are justified, then the state will have to rescue the citizens from the trouble ”, Igor Sudets sums up.

It seems that the state will be able to fully recognize the cryptocurrency only under the condition that it can control its functioning and the conduct of transactions. However, this condition is contrary to the very nature of cryptocurrency and can undermine the credibility of the entire crypto-community.

CRYPTOCURRENCIES
  • bitcoinBitcoin$5,073.07
  • ethereumEthereum$165.08
  • rippleXRP$0.328487
  • tetherTether$1.00
  • eosEOS$5.34
  • stellarStellar$0.115434
  • litecoinLitecoin$79.45
  • cardanoCardano$0.084496
  • tronTRON$0.026709
  • moneroMonero$66.99
  • iotaIOTA$0.320025
  • nemNEM$0.065990
  • dashDash$120.85
  • neoNEO$11.36
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