Well, the crypto domain has been attaining immense popularity lately owing to its dynamic nature and the potential that people believe it to have. However, there are several downsides of the digital currency space that have still not been talked about widely. People should know why is crypto bad for both the environment and political sectors. Moreover, on this International Day of Peace, we would like to highlight the fact that global peace cannot be attained if the crypto domain is not regulated properly. In addition to that, there have been several instances where these currencies have caused loss to masses of people.
Why Is Crypto Bad For Political Relations?
The cryptocurrency space has been regulated by each country in its own manner. Also, till now proper laws for participation in the domain have not been formulated. This is a crucial factor in inducing global unrest due to crypto. Since the crypto market operates in every part of the world (except for the ones that banned it), every little development that takes place in one part affects the other. Therefore, the disparity in regulations is a valid reason to justify the question of ‘why is crypto bad for attaining peace globally’. Moreover, the fact that a number of countries have banned and are planning to ban crypto shows why is crypto bad for several reasons.
China And Crypto
China has never had a good relationship with cryptocurrencies and even banned them last year. It had earlier in May 2021, restricted financial institutions and companies that provided payment services to offer any aid to crypto transactions in the country. Thereafter, by September 2021, it completely banned the use of digital currencies in its peripheries.
The move was taken as Chinese regulators understood the loopholes in the crypto domain, especially Bitcoin transactions. This is why it was necessary for them to take action against it and they did. Further, banks and other financial institutions also supported this move as they understood why cryptocurrency is bad for the country and its order.
Winston Ma, an adjunct Professor at NYU Law School, commented on this move saying:
“In the history of crypto market regulation in China, this is the most direct, most comprehensive regulatory framework involving the largest number of ministries.”
The government agencies in the country identified that crypto was having negative effects on the environment as it used an immense amount of power and energy resources. In addition, the domain is completely volatile and unpredictable, which initiated the need for proper regulation or banishment. U.S. Republican Senator Pat Toomey then tweeted on the matter noting that:
“Beijing is so hostile to economic freedom they cannot even tolerate their people participating in what is arguably the most exciting innovation in finance in decades.”
Moreover, the nation’s main aim was to restore ‘social order’ citing the social impact of cryptocurrency and that is why the China crypto ban legislation was inevitable. People’s Bank of China (PBOC) stated that no virtual currencies were to be circulated in the country and even prohibited international crypto exchanges from operating within their boundaries. This is where the global unrest due to crypto arises. Due to the fact that overseas crypto exchanges are not allowed in the country, there might have been some issues in the political relations of China with countries whose exchanges it barred from providing services to crypto investors in their country. This can be considered as a negative impact of cryptocurrency on economy of China.
Kazakhstan’s Disrupted Crypto Domain
Kazakhstan has been trying hard to regulate crypto in its country and has been successful to an extent but that doesn’t change the fact that a few months ago the Russia-Ukraine war changed how the mining process worked there. There had been repeated and violent protests on the matter, which provoked the government to shut down the Internet in the nation for a couple of days. This, in turn, affected the Bitcoin mining activities in the nation and created unrest in the country. It indicates that not only does a country hamper its relationship with other nations but might also lead to a disturbance within the domestic territory.
Going into detail, we know that the mining industry in Kazakhstan is really huge, and people have been lured due to the cheaper electricity rates. However, during the protests, the country decided to go in the other direction by shutting down internet services so that they could restore law and order. This move further backfired as the country that accounted for a huge 18% hash rate in the world in August 2021, saw a plunge in Bitcoin mining activities by over 10%. Thereafter, Bitcoin prices started crashing again which again affected the residents who were not mining activities.
In addition, the country has become very stringent with crypto regulations and even probed into a crypto mining hotel in early August 2022 accusing it of committing a crypto crime. As reported earlier by Crypto Venture News, the Financial Monitoring Agency of Kazakhstan (FMA) has been making several efforts to check on the crypto frauds or scams that might be existing in oblivion. The agency, therefore, initiated a probe into a crypto mining hotel based in Kazakhstan (Bincloud) accusing it of operating on a Ponzi scheme, or a financial pyramid method. The FMA announced that the investigation had been led by the watchdog’s department, which is situated in the West Kazakhstan region.
A report by the New Times mentions that:
“The deadly street battles in Kazakhstan began as protests over surging fuel prices. After the country’s largest telecommunications company shut off internet access throughout the country on Wednesday afternoon, processing activity on Bitcoin plunged. The hash rate, a measure of the global computing power devoted to mining the cryptocurrency, fell more than 10% after the outage.”
Therefore, though the problem was not initiated due to crypto itself it ultimately points toward the answer to the question of why is crypto bad for attaining global peace. Also, a negative impact of cryptocurrency on economy of Kazakhstan was noted due to the reformations it made.
Indian Regulations On Crypto
India has time and again tried to regulate the crypto domain. At a time when the domain is not bound to provide taxation in several countries around the globe, India has formulated tax laws. This move has been appreciated by those who understand that having a tax on the crypto space is necessary. This way it is easier to keep a watch on the transactions made in the country. These records would then help the country to know how much of the funds have been spent or earned from the space.
When the tax scheme was not implemented, it was convenient for people to hide their income and expenditure (which might result in the generation of black money.) This would have been detrimental to the economy as a whole and was the worst impact of cryptocurrency on developing countries that India might have faced. This is why the Reserve Bank of India (RBI) has time and again tried to impose a ban on crypto as it has noticed the reasons why is crypto bad for the economy. The RBI has time and again warned about why cryptocurrency is bad for the nation as a whole and has demanded a proper framework regarding that.
However, these efforts have not been fruitful only due to the fact that the country is considering political relations as well. Regulators noted that it was important to have global cooperation in order to frame crypto laws. But currently, such a situation has not been witnessed. Thus, pushing the implementation of these actions further. Moreover, the impact of cryptocurrency on developing countries has to be studied carefully before any such regulations are formed in India.
A Controversial Round-up!
We hope that the answer to the question of why is crypto bad for the attainment of global peace was answered in an optimum manner in the article above. However, we do believe that the situation might change if the regulators of different countries come together to form a global protocol for the crypto space. This might change the entire perspective about this domain and the social impact of cryptocurrency would be the other way round as well. But one thing is for sure that this is not happening sometime in the near future as the countries have been more concerned about their domestic territories rather than the globe. Therefore, it would be intriguing to watch for updates on similar lines.