China’s central bank on Friday declared all cryptocurrency transactions illegal, saying virtual currencies would disrupt the economic and financial order, facilitate criminal activity and endanger the security of people’s assets. In the past few months, several Chinese provinces had already ordered crypto miners to cease operations because they were putting a strain on the energy supply.
China’s crackdown on cryptocurrency trading and mining comes from the fact that digital currencies, including Bitcoin, Ethereum, and Dogecoin, have become mainstream investment destinations. Few would deny that cryptocurrencies pose a threat to financial stability from the perspective of central banks and governments, and all want control over digital currencies to manage risk, volatility and uncertainty.
U.S. Securities and Exchange Commission chairman Gary Gensler said in an interview with the Washington Post on Tuesday that he feared lack of oversight over trading in cryptocurrencies would harm U.S. investors, while raising doubts about the long-term viability of various forms of private money the market. Gensler compared cryptocurrencies with the era of “wildcat banking” in the middle of the 19th century.
The unregulated financial system created by trading in cryptocurrencies poses a clear threat to the Chinese government and US authorities. This may not be the case for El Salvador, which became the first country to legal tender Bitcoin on September 7th created the largest testing ground for cryptocurrencies. The move has sparked doubt, curiosity, and even excitement inside and outside the Central American country as people want to know if a digital currency can transition from a niche value to an official currency unit.
In Taiwan, cryptocurrencies are considered a commodity. The central bank and the Financial Supervisory Commission (FSC) issued a joint statement in 2013 saying that digital currencies like bitcoin were “highly speculative virtual commodities,” and the commission ordered local banks not to accept or accept bitcoins that same year exchange or offer Bitcoin-related services at ATMs.
In 2018, Taiwan passed amendments to the Money Laundering Control Act (洗錢 防制 法) that included an article that would allow the government to regulate virtual currency platforms and trading companies as financial institutions. Starting July 1, new money laundering regulations require cryptocurrency exchanges in Taiwan to conduct proper know-your-customer procedures and report transactions above NT $ 500,000 to prevent money laundering.
Although cryptocurrency trading has become an alternative method for investors in Taiwan to accumulate capital, the financial industry’s stance on virtual currencies remains cautious and conservative. The government has often warned about the volatility of cryptocurrencies, saying that they pose a much higher risk than stocks or gold. Although the FSC created a mechanism for offering security tokens – which enables companies, and especially startups, to issue virtual tokens and raise funds – such practices are still governed by the Securities and Exchange Act (證券 交易 法), and the Die The government’s stance is to manage the tokens as a funding tool for businesses rather than a means of making money for investors.
Unlike China, Taiwan would neither ban the trading and mining of cryptocurrencies nor introduce Bitcoin as legal tender. While the number of cryptocurrency platforms and exchanges offering virtual currency-related services has increased in Taiwan since 2014, the FSC is likely to continue to take a step-by-step approach in developing a legal framework for the industry against the relentless volatility and development of cryptocurrency markets .
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source https://www.bisayanews.com/2021/09/26/editorial-the-fate-of-cryptocurrencies/
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