Why Authorities are Baffled with Virtual Currencies?

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Why Authorities are Baffled with Virtual Currencies

ForexMinute.com – The European Banking Authority (EBA) dropped a bomb on the cryptocurrency businesses in Europe when it asked the commercial banks to avoid using Bitcoin and other cryptocurrencies, until the industry is effectively regulated. The text particularly discourages financial institutions to purchase, sell and protect digital currencies.

This event once again brought the famous war between governments and virtual currencies. So far this week, we have heard of the US Senate committee to start a research on Bitcoin, and the New York’s Department of Financial services issuing a notice to several companies asking how they operate cryptocurrencies.

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When it comes to the reasons behind such bafflements, almost all the financial authorities sing the same melody. Drug and weapon trafficking, terrorism, financial frauds, piracy and child pornography turn out to be some of the major problems which Bitcoin and other digital currencies openly inflate, says the authorities.

It is after all a fabricated perception if one digs a little bit further. The EBA paper says too many negative things about cryptocurrencies, all at once, in order to manipulate mind sets that already favor them. For instance, the authority speaks of is the volatility of cryptocurrency markets which can significantly reduce investments. But they never seem to care about saying that virtual currencies are nothing but an asset, like stocks, which functions solely on the ration of demand and supply. Like a stock’s value can be reduced to none, an asset like Bitcoin can also lose some value after a time. The vice versa of this situation is equally possible.

Some other worthless reasons given by EBA include is identity theft related to cryptocurrencies (what of credit cards then?), exposing to new tax laws (so what, don’t impose them), incorrect debits (no comments), etc. Our question however is, why not simply banning these cryptocurrencies when they possess such a danger.

Maybe they won’t because they will have to outlaw a whole section of indirect exchange, which include airline miles, amazon and Zynga coins, and none the least, the state coins that are basically a form of digital currency as well. Then, the only option left is the regulation, which will simply put cryptocurrencies under government’s watch.

The overall game here is to keep the control of monetary system under the watch of few. And thus people are given with only two options, either to remain a slave of traditional finance ecosystem or create your own using the concept of Bitcoin and democracy. The authorities never thinks of a plan in which both the crypto and fiat currencies can coexists, in which people are given the options to choose and trade. Instead, they feel like continuing with this fraudulent, unstable, aristocratic and moribund system.

Thus, the bafflement!

What they don’t understand is that that stifling regulatory framework does not affect the operation of Bitcoin; just be expelled from the country for an industry with the potential thousand Silicon Valleys and leave finances alone to entrepreneurs.

To contact the writer of this article: Yashu Gola at yashu@forexminute.com

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