They don’t have control over it!
Can there be any other crucial reason?
Being the central system of any country, it is vital for them to have a comprehension of every trivial thing that is going on within. It is not all about the taxes. However any kind of capital growth that is beneficial for the country’s people and yet no tax can be charged from it; puts a loophole in the age financial system.
But this is not the only reason why the government hates Cryptocurrency. There are certain malpractices that can very well be conducted in the virtual world, which also becomes their concern.
1. No Concrete Regulation
Government control has been withdrawn from many institutions after the privatization. However, the reason for the government’s resentment is the fact that there is no concrete regulation. Yes, there are rules, but no one regulates them, and when it comes to consequences, breaching one doesn’t actually have any.
Even with privatization, the government can still call out companies and charge them during any criminal activity. This is something that can never be done in terms of Cryptocurrency, as most government officials have no idea about the activities going on in the domains.
They will have no official say in it even if they do because they have invested in this digital currency ecosystem.
2. It Is A Threat To Central Bank
Till now, the only thing that has been controlling the country’s finances is the central bank. However, Cryptocurrency and its decentralized nature are making it more difficult for any centralized institution to keep a record.
Yes, some Cryptocurrencies can be exchanged in fiat money; however it doesn’t have any link to banks. They are simply transferred to a trading platform like bitcoin equaliser, from which the right amount can be withdrawn. This is one of the pioneer reasons for the government’s fear of being overruled by Cryptocurrencies.
There already has been speculation from top-tier investors all around the world that Cryptocurrency will do to banks what email did to postal services.
3. It Is Stable
At first, the government wasn’t much concerned about the whole Cryptocurrency business because it wasn’t that mainstream. But, like any other technology-finance niche, it was twerking the interest of some.
However, it has almost become a domestic name within the years, and everyone around is trying to penetrate the market. That being said, it is not a very stable environment with the market volatile and fluctuating all the time.
Now, the government fears that big names being associated with this phenomenon will give it the credibility and the popularity that it requires to pull in every citizen. If everyone starts to endure heavy losses under the aid of liquid assets, the entire economy can crumble.
The government will have nothing to do in this situation since, from the beginning, they had no control over it.
4. Money Laundering
The lack of taxation was already a significant problem for this digital currency. Since it is not helping the world economy, however, with the non-tangible characteristics of Cryptocurrency, money laundering is becoming a big nuisance.
People who are already involved in fraudulent tax activities are getting the golden card to transfer all their fiat assets in this Crypto world and launder fresh, clean money. Sometimes they don’t even exchange but simply keep the capital in the digital world, safe from the scrutinizing eyes of the government.
5. Other Criminal Activities
Drug cartels and Terrorist groups have been seen increasing in this Crypto world. The lack of higher body control gives them the wild card to establish and continue such criminal activities in the virtual world.
Other than that, some cybercriminals have found the world of Cryptocurrency a new platform to step in with their malware practices. Although Cryptocurrencies claim to be a safe environment, this doesn’t stop these criminals from finding advanced ways to scan people of their millions of dollars worth of capital.
All reasons mentioned above might not be valid, but some are.
However, having complete government control over the ecosystem of Cryptocurrency might not be the best solution.
However, suppose some kind of regulatory control could be imposed where the decentralized nature of the assets are maintained, giving investors the entire control. In that case, the government will also be allowed to take precautionary measures in case of some criminal activities.