Why Is Bitcoin Being Banned?

by Andrew McGuinness  //  jul. 26, 2018

Since it first started booming in 2015, and even before then, bitcoin has seen its fair share of love and hate. Most investors have gained high returns since making the decision to invest in bitcoin. However, financial institutions and entire countries are deeming it to be too dangerous of a unit of currency to be utilized or invested in without risk. You might be asking yourself what exactly these risks are. The following are the top reasons why bitcoin has been banned around the world.

1. Improve state of traditional banking

The creation of digital currencies was seen as a positive for the realm of technology due to the strides it has made for the future of currency and the grand reveal of decentralization that came with it.

However, you can only assume what financial institutions and government organizations were thinking when first faced with this concept of a decentralized, digital currency. A currency that involves no monitoring, or controlling of your funds by these institutions whatsoever. A currency that allows third parties to take no part in your transactions at all. It sounds like any financial or government institution’s nightmare.

Due to this fact, many banks have seen cryptocurrency as a threat to the well-being and stability of their own institutions. Wells Fargo is among the most well-known financial institutions to ban the usage of bitcoin at its bank and brokerage firm. Countless other brokerage firms have joined Wells Fargo, with only three major brokerages left allowing the investment and trade of bitcoin: TD Ameritrade, TradeStation, and ETrade.

2. Volatility

One of the main reasons why brokerage firms are rejecting bitcoin investments is actually because the cryptocurrency is seen to be too volatile. Ally Invest, for example, originally offered investments in bitcoin. After a single week experiencing the instability of bitcoin with its trades, the firm decided it was a better idea to remove its bitcoin offers and study up on the cryptocurrency further before making a commitment.

3. Avoid money launderers

The fact that bitcoin and other cryptocurrencies allow for anonymous, decentralized usage attracts money launderers far and wide. This comes to no surprise to the South Korean government, who are basically banning it to avoid the occurrence of this type of crime in their country.

Countless restrictions are being applied to bitcoin usage, removing a lot of the ways it was once attractive for users. It will be monitored by financial institutions, and anonymous virtual accounts are no longer allowed.

South Korea’s regulations are limiting the usage of bitcoin’s benefits to the point that it is becoming reminiscent of just another centralized fiat currency, with rules, middlemen, and third parties involved in the monitoring and controlling of your funds. South Korea’s Financial Supervisory Service governor admits that the institution is under the impression bitcoin will not be as successful for very much longer and may crash fairly soon.

Conclusion

Bitcoin and cryptocurrencies in general are seen as a danger to countless financial institutions, government-powered institutions, and entire countries. The reasons for this vary. Most financial institutions are trying to watch their own backs by avoiding any involvement with cryptocurrency due to the fact it has been gaining speed and may one day make fiat currencies and the institutions that centralize them completely futile.

Volatility is also a factor that is necessary to consider. It is difficult to trust bitcoin and offer it as an option within brokerage firms when it is much more volatile than the stocks brokers tend to work with. Not only this, but it is incredibly easy to launder money with anonymous digital currency that is not associated with or controlled by banks whatsoever.





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