Bitcoin and cryptocurrencies, in general, have always been frowned upon by governments across the world. There are numerous factors for this.
On the one hand, a group of people who support this hostility towards Bitcoin and other crypto-assets says that this is due to the unpredictability and volatility of these digital currencies. Furthermore, they seem to be in a bubble of their own with a sort of disconnect to the real world.
On the other hand, crypto proponents believe that cryptocurrency and blockchain technology signified autonomy and independence from any kind of authority, including the world’s governments. These principles and ideologies behind them make the government apprehensive since they have no control of these currencies.
Due to this everlasting debate, standardization and regulations of cryptocurrencies, and the tax implications of owning, staking, mining, cryptocurrency remains ambiguous.
Governments and countries across the world are reacting to all this in different manners. Two of the major countries are the USA and China.
China’s Ban On Cryptocurrency Transactions
For quite some time, China has been trying to curb the cryptocurrency operations happening in the country. In fact, China was known to be the world’s biggest Bitcoin mining center. However, China is known for its strict censorship laws, and it has banned services from the biggest of the biggest companies such as Google, Vimeo, Twitter, and numerous other forums.
Quite recently, China implemented the ban on cryptocurrency, stating that any and every kind of cryptocurrency transaction by Chinese citizens will be illegal and punishable.
Due to this, Bitcoin miners either had to stop their operations or shift to other crypto-friendly countries worldwide. For instance, many people moved operations to the US by setting up offices in states where the jurisdiction allows the transactions of cryptocurrencies.
China states this is ban is due to the excessive consumption of power that has dire effects on the environment. However, this seems to be a diplomatic answer because China plans to launch its own digital currency known as the Yuan.
Now, unless special measures are taken to reduce power usage, the digital Yuan would also consume an enormous amount of power.
Due to this ban, there has been a massive drop in the prices of cryptocurrency. After the ban was announced, the price dropped so low; it shook the crypto world. However, as experts predicted, the price surged upwards soon enough, hitting a new all-time high value before dropping again.
This sort of volatility is pretty common with cryptocurrencies and especially Bitcoin. However, this time it was due to the government’s actions of another superpower – The USA.
USA’s Infrastructure Bill And Tax Implications On ‘Brokers’
Joe Biden announced and signed an infrastructure bill with new tax laws for a category known as the brokers. However, the experts and proponents from the crypto world were highly unhappy with this because of the ambiguity that existed with the category of brokers.
It included miners too, which to people seemed unfair since mining and staking are operations that are quite different from brokers.
This is because brokers and miners don’t really handle any funds but are still expected to pay taxes according to the laws.
This was the reason for the Bitcoin and Ethereum prices dropping low once again. This is because the problem runs deeper than that meets the eye.
When the law includes exchange platforms such as Coinbase within the brokers’ category, the platform has to report all its activities to the government. Now, this is a fundamental issue for crypto enthusiasts and experts due to the simple fact that it is against the core philosophy.
One of the most significant ideologies behind cryptocurrencies and blockchain technology was independence from any kind of authority, including the government. This way, only the people have complete control over their money, and there is no intervention from other third parties.
With this law going into effect, it will give the government control over the crypto assets and activities that take place on the blockchain, thus stripping the technology off of its core principle.
This is why there have been protests by numerous proponents and prominent actors of the crypto world. Furthermore, they have even suggested alternate ways in which the tax implications would mean for various actors in the crypto world.
Due to these reasons, the prices of Bitcoin and other crypto-assets dropped drastically. But if you’re a crypto enthusiast, there’s still some good news for you.
Bitcoin Predictions For 2021 End And 2022
Experts are predicting that the price of Bitcoin will surge upwards once again, despite these setbacks, and might even reach $100,000 by the end of this year. While this number looks pretty unlikely, the experts’ have been proving time and again how right they are.
Moreover, the volatility aspect of Bitcoin is pretty standard, so if the price peaks till that point, it wouldn’t be a surprise for crypto enthusiasts.
Experts are, in fact, suggesting people, not panic sell and hold onto their assets as soon, the price will increase, and everyone holding the said crypto asset will earn enormous profits from the digital currency.
Numerous other countries are planning to have their own digital currency instead of embracing the existing crypto assets. One simple reason behind this can be the amount of control they can have over these digital currencies.
However, despite these setbacks for the crypto world, it is being backed by giants such as Twitter, Steve Wozniak, Tim Cook, Elon Musk, and numerous multi-billionaires with vast businesses.
Hence it’d be interesting to see how things unfold for the crypto world as these two contrasting decisions and actions towards crypto assets clash.