The legal status of cryptocurrency has been and still is very contentious worldwide, with some countries recognizing them as a medium of payment, while in others, mere ownership of crypto is enough to get you to prison. Will the increasing global attention to CBDCs change anything?
Different countries and territories around the world have shown various attitudes towards crypto, hence, there is a distinction in the legal nature of digital currencies globally. Of course, they give their justifications for their moods towards cryptos.
Generally speaking, there are countries where cryptocurrency is legal, while there are those where it is restricted or even illegal. For instance, China is freezing bank accounts of individuals and companies believed to be involved in Crypto Over the Counter (OTC) transactions. Thousands of people, since June 4 are now locked out of their funds in banks in Guangdong Province for conducting crypto OTC businesses.
The legislation in countries like Afghanistan, Pakistan, Algeria, Qatar stipulates criminal responsibility for dealing with cryptocurrency. So a person exposed in Bitcoin trading can end up with a sentence behind bars. Literally.
India has also been struggling to outlaw cryptocurrency activities. Despite the community succeeded in struggling for cancelling the ban imposed by the country’s central bank, crypto business still faces scrutiny and regulatory uncertainty in the country. Meanwhile, one would feel at home doing crypto businesses in other countries like Japan or Switzerland, due to their friendliness towards digital currencies. On the other hand, Argentina, Kenya and a bunch of other countries still make a list of “undecided” countries concerning crypto as they have not taken any side yet.
While South Korea and China are making headway in the launch of their CBDCs, other countries have not been sleeping. Lithuania is doing great in the field of CBDC and could become the first European country to finish the CBDC race. Sweden, Denmark, France, etc. are all busy exploring this field.
The high interest in CBDCs presents both opportunities and challenges for cryptocurrencies. Recent research by CoinIdol, a popular global crypto and blockchain news channel, revealed that there might be a fight between crypto and CBDCs should the latter become consolidated in the financial market. On a good note, the current trend in public awareness about CBDCs initiated by the government is equally attracting public attention towards crypto.
However, a potential fight between CBDCs and cryptocurrencies is inevitable and would certainly lead to a shift in government policies mostly in favour of CBDCs. Now, this is where the governance systems of countries come into play. Communist and authoritarian regimes such as China are most likely to impose stricter regulations on the use of cryptocurrencies or even name them “illegal” to avoid ‘unnecessary’ competition in the financial market, while crypto-friendly nations such as Switzerland, although might still want to somewhat maintain the financial freedom currently accorded to cryptocurrencies, could be forced to change several policies.