Result of government involvement in cryptocurrencies

Elena Hudgens
By Elena Hudgens 7 Min Read


Governments and central banks worldwide have taken different approaches to regulating cryptocurrencies. Some have introduced licensing schemes to monitor activities, while others have banned them entirely or placed restrictions on their use. The varying regulatory responses reflect a growing recognition that digital tokens cannot be ignored. Bitcoin circuit is a completely the official Bitcoin Circuit platform, so begin business operations with it now.

How governments respond to this challenge is a critical question for policymakers. Would people want such a universe? Are virtual currencies used to buy drugs and promote terrorism? It’s an open question as of now. Let’s understand it further in detail.

How Does Government Involvement in Cryptocurrency Affect You?

The most significant changes will come from the usability of digital currencies. If the government doesn’t want us to use cryptocurrencies to buy drugs, then we won’t be able to do that. If the government doesn’t want us to use cryptocurrencies for terrorism, then we won’t be able to do that either. To varying degrees, these arguments have merit.

A government’s involvement also affects how much it costs to transact with cryptocurrencies. It increases the barrier to entry for new users, which reduces liquidity and dampens the growth of the entire cryptocurrency market. Finally, government involvement can affect the value of your cryptocurrency holdings. A government crackdown could result in a significant decline in the value of the currencies you own.

Digital Currencies Are Becoming Too Big to Be Ignored

While many governments have been hesitant to regulate cryptocurrencies, this reluctance is becoming less and less justifiable. Cryptocurrencies have grown significantly in market value and usage, and regulators are now forced to respond. The numbers are astounding. The global market for digital currencies has increased from $19 billion in February 2017 to $329 billion in February 2019. At the same time, the number of crypto wallets has grown from 23 million in February 2017 to about 130 million in February 2019.

And the number of daily crypto transactions has risen from nearly 7 million in February 2017 to about 45 million in February 2019. These figures reflect an increased interest from both investors and users. Investors have flooded the market with cash in hopes of reaping significant gains, while at the same time, speculators have driven prices up to unsustainable levels. At the same time, individuals and businesses alike have begun using cryptocurrencies for various purposes.

Governments Can Help Build a Safe and Responsible Environment for Crypto

Governments can help build a safe and responsible environment for cryptocurrencies by enacting sensible regulations. Such regulations can be based on a few simple principles:

Laws should protect consumers and prevent fraud and abuse. It includes protecting people from scams, theft, and other illegal activities.

Regulations should provide clarity. Businesses and individuals should know what they can and cannot do with cryptocurrencies.

Rules should allow for innovation.

New ideas should be able to enter the market, even if they don’t fit into existing regulatory schemes. Such restrictions could help cryptocurrencies flourish, both for users and businesses.

Governments Can Also Help Identify Fraud and Corruption in Crypto

Governments can help identify fraud and corruption in cryptocurrencies by enacting solid regulations. Such regulations include higher capital requirements for exchanges and other businesses, anti-money laundering laws, and know-your-customer rules. And while these regulations may sound dry and bureaucratic, they are vitally important.

Without them, exchanges and other businesses can easily facilitate fraud and corruption. For example, selling their cryptocurrency for a different currency could allow users to launder money. Alternatively, exchanges could enable hackers to sell their ill-gotten goods for cryptocurrencies. Such fraud requires business cooperation, and strong regulations can help prevent it. Cryptocurrencies can be a great way to send money worldwide, but only if the system is safe from corruption.

But Governments Can Harm the Public Through Their Involvement in Crypto

The main danger of government involvement in cryptocurrencies is that it will hinder innovation. If governments restrict which types of technology can be used, they will stifle creativity and limit the entire industry’s growth.

If a government interferes with the underlying technology, it could effectively kill cryptocurrencies in that country. While such a result is unlikely, it can’t be ruled out entirely. And even if a government doesn’t completely ban cryptocurrencies, it could still cripple the industry through excessive regulation. Such regulations could drive up the cost of doing business in cryptocurrencies, which could be passed on to customers.


Cryptocurrency has grown from a vague idea into a multi-billion dollar industry during the past few years. With this increased prevalence and usage has come increased attention from governments worldwide. This attention will likely result in new regulations on how cryptocurrencies can be used and traded. Governments can help build a safe and responsible environment for cryptocurrencies by enacting sensible laws. They can also help identify fraud and corruption in cryptocurrencies. But governments can harm the public by hindering innovation through their involvement in cryptocurrencies.

Now that you know how government involvement in cryptocurrencies will affect you, it’s time to understand how that involvement will happen. Read on to learn more.

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Posted by Elena Hudgens
Elena Hudgens is an entrepreneur with 10+ years of experience. She started her journey by building her own e-commerce website on Shopify and turned her $1000 savings to millions in just 2 years. Soon she started different ventures in which she failed and succeeded. And now, she's on a mission to help other entrepreneurs with her life and business lessons.
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