Bitcoin seemed to be the unquestioned leader at the beginning of the cryptocurrency boom. Up until early this year, Bitcoin accounted for most of the industry’s market capitalization. Then, Ethereum, Ripple, and other currencies rushed to catch up in just weeks. While Bitcoin remains the market leader, several analysts argue whether cryptocurrencies are currencies due to the industry’s temporary fluctuation. Some are predicting that even more significant changes could be ahead. Among them? The idea is that cryptocurrencies could come to replace cash entirely.
However, before we dive into the ideology above, we will first show some examples of the world’s biggest countries, their current stance with crypto, and how it is moving forward.
While finding a uniform legal approach at the state level is challenging, the United States established federal cryptocurrency law. Cryptocurrencies are not considered legal cash by the Financial Crimes Enforcement Network (FinCEN). Because cryptocurrency tokens are “other value that substitutes for currency,” cryptocurrency exchanges appear to be money transmitters. Cryptocurrencies are not considered lawful cash by the Internal Revenue Service (IRS). Nonetheless, it has given tax guidelines and describes it as “a digital representation of value that operates as a medium of exchange, a unit of account, and a store of value.”
According to the US Treasury, Crypto laws are urgently needed to prevent global and domestic criminal activity. FinCEN suggested new cryptocurrency legislation in December 2020, requiring bitcoin exchanges and wallets to gather data. The regulation will go into effect in the fall of 2022. Exchanges would be required to file suspicious activity reports (SAR) for transactions above $10,000, and wallet owners would be required to identify themselves when transmitting more than $3,000 in a single commerce.
In Canada, cryptocurrency is not legal cash, but it may be used to purchase goods and services online or in businesses that accept it. Canada has taken a proactive approach to cryptocurrencies, regulating them largely under provincial securities regulations. As early as 2014, Canada imposed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) on organizations trading virtual currencies. The first cryptocurrency-only investment fund was filed with the British Columbia Securities Commission in 2017.
The Canadian Securities Administrators (CSA) released a notice in August 2017 on the applicability of current securities laws to cryptocurrency. In January of 2018, the Governor of the Bank of Canada described them as “technically” securities. Since 2013, the Canada Revenue Agency has taxed cryptocurrencies, and bitcoin transactions are subject to Canadian tax rules.
While rules are continually changing, there are no indications that substantial new legislation is underway. Before adopting more laws, we believe the Canadian government and crypto exchanges will need time to assess how recent reforms have impacted the crypto sector.
In 2013, the People’s Bank of China (PBOC) prohibited financial institutions from processing Bitcoin transactions, and in 2017, it banned
ICOs and domestic cryptocurrency exchanges. Unsurprisingly, China does not consider cryptocurrencies legal cash, and the government has a reputation for enforcing strict cryptocurrency regulations across the world. The government determined that cryptocurrencies had property status to assess inheritances under a 2020 revision to China’s Civil Code.
There’s no sign that China would lift or relax its cryptocurrency prohibition anytime soon. Nonetheless, recent government pronouncements backing blockchain technology have fueled speculation that China aspires to be a digital currency leader. While a date has yet to be established, China’s central bank has been working on introducing an official digital currency for some years. It started in September 2021 when pilot tests of their e-CNY digital money had been completed in many places. The e-CNY token will be accepted as payment for goods, bills, transportation fares, and tolls, replacing cash and coins.
Advantages for the Crypto Future
Futurism published a paper that outlines some probable effects if cryptocurrency overtakes fiat currencies at some time in the future. One major issue is that cryptocurrencies cannot be manipulated as rapidly as conventional currency due to their decentralized and uncontrolled nature. Aside from that, cryptocurrencies may be a better fit for a universal basic income than fiat currencies. Some programs have previously tried to deliver universal basic income using bitcoins.
Furthermore, cryptocurrencies can eliminate the need for intermediaries in routine transactions. This might save corporations money while also benefiting consumers.
Concerns for the Crypto Future
Of course, there are significant obstacles and risks associated with this scenario. Traditional currencies will lose value without redress if cryptocurrencies outnumber cash in terms of usage. If cryptocurrencies completely take over, new infrastructure will be required to allow the world to adapt. The changeover would undoubtedly be challenging since cash may soon become incompatible, resulting in the loss of certain assets. Established banking institutions would almost certainly have to hustle to adapt.
It’s worth noting that while the early Bitcoin frenzy saw a slew of businesses volunteer to take the cryptocurrency, that list has slowly shrunk, reigniting concerns about the currency’s use as a medium of exchange.
Governments would suffer beyond the implications of a cryptocurrency future on individual consumers and financial institutions. In many aspects, government authority over conventional currencies is essential for regulation, and cryptocurrencies would function with far less government oversight. Governments, for example, could no longer decide how much money to issue in response to external and internal forces. Rather, autonomous mining operations would be responsible for creating new currencies or tokens.
Regardless of how individual investors feel about the potential of a move from traditional currency to cryptocurrency, it is unlikely to happen. Yet, with so much conjecture that the cryptocurrency business is a doomed bubble, it’s also likely that projections of a crypto future are exaggerated. It’s tough for investors since crypto-related changes rapidly, and anticipating them is always tricky. Whatever happens with crypto in the future it is still not late to get started by getting some at the BTC exchange called CEX.IO where you can purchase bitcoin or buy dogecoin instantly