Bitcoin is banned in Algeria, Bolivia, China, Colombia, Egypt, Indonesia, Iran, Iraq, Nepal, North Macedonia, Russia, Turkey, and Vietnam. Bitcoin is used in all these places. Bitcoin is a censorship circumventing monetary network. As such, it’s an incredibly powerful tool against financial oppression of all kinds, including using the banking system to silence dissonance. Look at what Bitcoin has done in Nigeria, India, China, Myanmar, and Russia.
Governments can “ban” Bitcoin like governments can ban copyright piracy. With a little know-how, “criminals” anywhere can easily connect to the internet and interact with the 24/7 network.
Bitcoin’s network consists of miners, nodes, and users. If miners and nodes operate in any other country, the network is live. Anyone can download an open-source wallet application on a mobile device. Even if the mobile device is confiscated, wallet address passwords can be memorized and value can be accessed again later, anywhere.
There’s no indication that the U.S. will ban Bitcoin, but they can enact onerous tax laws and other periphery obstructions. There’s a provision in the current US Infrastructure Bill that may define a digital-asset broker as, “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”
The wording is broad enough to possibly apply to miners, developers, and liquidity providers on the Lightning Network. This would, of course, apply to all other cryptocurrencies as well. Many fear this will stifle US job creation, innovation, and wealth that stems from the $1.5B global cryptocurrency industry. Here’s a take from Texas Senator Ted Cruz.
If this provision is included and the bill passes, it practically couldn’t be enforced, but still might lead to many highly successful startups and individuals moving overseas.
In 2014, the IRS and SEC issued guidance stating that it will treat virtual currencies, such as Bitcoin, as property for Federal tax purposes. There’s nothing onerous about that, but that could be changing.
Gary Gensler, the SEC Chairman, recently said that he thinks crypto creating, trading, and lending come under existing definitions of securities trading.
Notice he mentions the very creation of cryptocurrencies can classify them as securities. Most cryptocurrencies, besides Bitcoin, were pre-mined, meaning they sold units prior to being offered to the public. In many cases, long before, and in some cases, no blockchain was ever created with the premine proceeds.
It’s too early to say what steps the SEC might take in reining in the creation, trading, and lending of many cryptocurrencies in the US, but it’s something to keep an eye on.