Recently, the U.S. Senator Mike Crapo admitted that it would be difficult or impossible to banish the bitcoin on the United States. The Senator made a number of compliments about the cryptocurrency, by the time he was leading a hearing on cryptocurrencies in the Senate Committee of banking, housing and urban affairs. According to the congressman, the technological leaps are inevitable and the US should lead this movement of innovation.
He also stated that with a balanced regulation, the digital currencies and their underlying innovative technology can provide significant benefits. “It seems to me that digital technological innovations are inevitable and could be beneficial. I believe that the US should lead the development of these innovations and determine what should be the rules of the process along the way”.
The comment of Crapo took place after a busy month in the political scenario on the bitcoin. While the launch of the stablecoin Libra, from Facebook, has been strongly criticized, hearings that took place later on have unleashed a series of largely positive comments about the bitcoin.
Apparently, the tone of the American Congress appears to be moving towards a regulation of the cryptocurrencies. According to CNN’s analysis, the concept of banning the bitcoin has already been disposed. The next step will focus on the development of those standards.
Why do governments fear the bitcoin?
In the United States, the bitcoin’s gaining ground. However, in other countries, governments still fear the effects of the cryptocurrency. The main reason is that there is no central authority, a basic feature of the digital assets. Therefore, the concern revolves around the lack of control.
As the governments control the fiduciary currencies, they use what is known as a monetary policy to enforce economic influence. They also dictate how the fiduciary currencies can be transferred, allowing them to control the exchange rate movement. By doing so, they can determine who profits from this movement, taxing and tracking criminal activities.
All this control is lost when the non-governmental bodies create their own currencies. The control over the currency has many impacts in the country, perhaps most notably regarding the tax policy of a nation, the business environment and the efforts to control crime.
Although the concern about the crime is major, the role that the currency plays in the monetary policy of a nation has the potential of causing a much greater impact. As governments increase intentionally or restrict the amount of money circulating in the economy, in an effort to stimulate investment and spending, creating jobs, or avoiding inflation and recession out of control, the control over the currency is a huge concern. It is also an extremely complex topic.
Transfero has different investment approaches
Transfero Swiss is a company focused on administration and management of investment in digital assets – considered the newest class for asset diversification. Today we have three main strategies that vary the approach and the risk profile of the portfolio. Our consultants can help you in allocating the option that best fits your style. Schedule a meeting.