2019: Year Of National Crypto?

Dominik Olech
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We’re slowly getting closer to the end of the year, so the first reflections this subject come quite naturally. Of course, many things may still happen during December – but the overall feeling of the last twelve months is quite clear. The year 2019 in the crypto industry belongs to governments.

I have recently written several articles about the influence of recent China’s decisions on the cryptocurrency industry. The first one concerned the announcement of the government’s shift toward the blockchain technology, the other pointed at the actions taken against crypto in this country. These events caused some severe fluctuations in the market – and they were only the tip of the iceberg. Let’s check how governmental decisions have recently influenced our industry.

Regulations everywhere

Although the subject of the legal status of cryptocurrencies has been raised a few times before, last months were mainly full of proposed solutions in that matter. The real flashpoint for it was an announcement of Facebook’s Libra in the middle of the year. The perspective of the incoming currency, which will have operational support of the world’s most popular social media platform, has frightened the American authorities for sure. The regulatory conflict for the legal status of the stablecoin has begun, and it lasts until today.

As for now, no satisfactory solution has been proposed. The tense situation makes the lives of a crypto-related entrepreneur much harder. A good example here is the case of Poloniex, which moved its operations outside the US borders. This freed the exchange from the complicated situation and opened up a new market for it. However, Poloniex has also lost its faithful clients in the US. 

However, it’s hard to blame authorities for an attempt to regulate crypto assets. With the growing popularity of cryptocurrencies, the number of illegal usage is also increasing. On the one hand, we have a wide range of frauds related to our industry (just mention the OneCoin case, which recently again gains popularity because of new facts). On the other, the decentralized assets are hard to follow, so cryptocurrencies are a natural choice for trading illegal goods. Especially so-called privacy coins seem to be dangerous in the eyes of the law enforcers.

Everybody wants to have a crypto

The governmental’ interest in the cryptocurrency industry isn’t only limited to regulating them. Many countries express, more or less openly, their willingness to develop their own digital currency. The form of how the crypto idea would be included in the national economy is various. But the aim is usually the same: to get as much as they can in the ongoing cryptocurrency trend.

The separate case is China’s attempts to develop its own stablecoin. Although no specific details are known about it yet, the work on coin lasts from quite a time. And the recent announcement of China’s shift toward the blockchain technology might be a sign that stablecoin backed in Chinese yuan is on its way.

Speeding up works on this coin was likely caused by Facebook. Libra is intended to be backed in the US dollar, and a highly-efficient global network of social media giants may conduct to popularize new currency easily around the world. It would be a severe blow to China and a point for the US in the economic race of power between those countries. That’s why Mark Zuckerberg used this argument in his recent testimony. Apparently unsuccessfully, since it didn’t convince American authority that Libra will actually help the national cause.

Blockchain on aboard

However, despite the growing focus on the cryptocurrency aspect, the overall interest of governments in the blockchain technology is rising too. The possibilities of using decentralized networks may facilitate the state’s functioning in many fields. Conducting data flow between governmental organizations, or securing citizens’ data is only the tip of the iceberg of potential implementations.

Probably the most anticipated example of a state where blockchain is highly welcomed in Switzerland. Year by year, this Alpine country is introducing new implementations of this technology. Many of them are supported or initiated by authorities. For example, the Swiss Crypto Valley Association has recently announced the cooperation with the city of Zurich in aims to raise awareness of the blockchain technology for tourism and business in the country’s capital city.

We also shouldn’t forget about situations where blockchain is helping on the field where government and state let the citizens down. A prime example of such a situation comes from Venezuela. This crisis-ridden country is currently facing a problem of electricity blackout, which is hindering many aspects of daily life. Venezuelan Randy Brito managed to use blockchain to overcome at least one difficulty resulting from it. His device is using blockchain to enable receiving transactions by commerce shops during blackouts.

Those are only the most noticeable examples mentioned on our website last month. The nature of the relation between state and cryptocurrency industry (and blockchain technology in general) remains in question. The situation is still variable, and everything may happen in the near future.

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