Bitcoin is a decentralized currency not subject to government regulations. However, governments have the power to ban its usage if they have valid reasons to justify such an action. To do so, the government will have to pass a law that prohibits Bitcoin as a currency.
The Federal Reserve is focused on regulating banks and the United States dollar, so cryptocurrencies are generally outside its sphere of influence.
Whereas the majority of countries don't make using Bitcoin itself illegal, its status as a means of payment or as a commodity varies with differing regulatory implications. Some countries have placed limitations on the way Bitcoin can be used, with banks banning its customers from making cryptocurrency transactions.
P.M. Mishra, the founder of Finlaw, a law consultancy firm, said the exchange of funds between banks and cryptocurrency exchanges would cease if the government outlaws cryptocurrencies. Mishra added that "you won't be able to purchase cryptocurrency using local cash" and "you won't be able to cash them in."
Even though banning Bitcoin would be politically unpopular and unconstitutional, the US government still might consider the move if it could do so effectively—but it can't.
In its current form, Bitcoin presents three challenges to government authority: it cannot be regulated, it is used by criminals, and it can help citizens circumvent capital controls. Until the time that Bitcoin's ecosystem matures, it will continue to be viewed with distrust by established authorities.
No single entity like a government, an organization, or an individual can hack or even shut down Bitcoin. That's because of the technology that underpins Bitcoin. Blockchain technology is a highly-secure technology that applies a unique set of measures to prevent hacking or shutting down by a single entity.
While Bitcoin is welcomed in many parts of the world, several countries are wary of its volatility and decentralized nature. Some also perceive it as a threat to their current monetary systems while being concerned about its use to support illicit activities like drug trafficking, money laundering, and terrorism.
Cryptocurrencies are highly volatile and trading in them, without a proper understanding of the market dynamics, can be risky, as is the case with many other assets. Advertising, particularly those promoting specific crypto products or companies, can prompt people to start trading impulsively, which can lead to losses.
No single entity like a government, an organization, or an individual can hack or even shut down Bitcoin. That's because of the technology that underpins Bitcoin. Blockchain technology is a highly-secure technology that applies a unique set of measures to prevent hacking or shutting down by a single entity.
Cryptocurrencies are unregulated in India but in Budget 2022, the government announced a flat 30 per cent tax on gains from cryptocurrency transactions as well as a tax deducted source (TDS) of 1 per cent. “RBI is of the view that it should be banned.
According to the U.S. Library of Congress, as of November 2021, a total of nine countries have banned cryptocurrency completely. These countries are Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia.
Governments also want to regulate cryptocurrency because it is a very practical means for tax evasion and criminal activity since cryptocurrency payments do not need the clearing authorities of the traditional financial system to operate.
After meeting probable-cause and burden-of-proof requirements, law enforcement can get seizure warrants for any illicit funds that eventually land on compliant exchanges—and many funds eventually do.
No, Biden's executive order won't replace paper money with digital currency.
They may or may not be backed by physical assets. Crypto is a high-risk investment. The value of crypto is very volatile, often fluctuating by huge amounts within a short period. More than with any other investment, you must be prepared to lose what you invest.
On the other hand, banks have the scale, infrastructure and consumer trust needed to deliver the crypto-vision to the public at large. Cryptocurrencies will not destroy banks; they will accelerate the bank modernization journey. Banks are no longer fit for purpose.
Cryptocurrencies can be an extremely volatile investment
So if you're looking to make stable returns, this might not be the best bet. The cryptocurrency market fundamentally thrives on speculation, and its relatively small size makes it more vulnerable to price fluctuations.
Scholars from the Sharia Review Bureau in Bahrain said in 2018 that investments in cryptocurrencies such as ether (ETH) and bitcoin are permitted under Sharia law and, therefore, halal.
Cryptocurrencies aren't backed by a government or central bank. Unlike most traditional currencies, such as the U.S. dollar, the value of a cryptocurrency is not tied to promises by a government or a central bank. If you store your cryptocurrency online, you don't have the same protections as a bank account.
Russia has argued for years against cryptocurrencies, saying they could be used in money laundering or to finance terrorism. It eventually gave them legal status in 2020 but banned their use as a means of payment.
Crypto Assets Provide Challenges When the Owner Dies
Instead of being treated as cash in a bank account, they are considered assets. However, because these assets exist only in virtual form and are encrypted, they can be nearly impossible for surviving heirs to find.
The Bitcoin ecosystem is still developing, making it possible if not likely that Bitcoin itself will continue to evolve over the coming decades. But however Bitcoin evolves, no new bitcoins will be released after the 21-million coin limit is reached.
It's not likely that Bitcoin will crash to zero
Even though some things could make Bitcoin's value go down over time, it would take big changes in the economy and government, as well as the destruction of the Bitcoin network, for Bitcoin's value to drop quickly to zero.