by Kenneth Schortgen, The Daily Economist:
Up until now most governments have treated cryptocurrencies as little more than a nuisance as their market cap has not been enough to be seen as a threat to primary markets, and their acceptance by the public has been sparse at best. However with the advent of China beginning to crack down on the facilities that make the trading of Bitcoin and other cryptocurrencies quite easy for investors, the war between de-centralized currencies and sovereign government controls may be on the cusp of getting underway.
Over the past two days two well known Captains of Industry in the United States have both mentioned the Damocles Sword that hangs over the heads of the world’s nearly 1000 cryptocurrencies, and are intimating that should these digital currencies become too great a threat then governments will be more than willing to focus their power on ending them as a medium of exchange, the same way that the U.S. uses sanctions and the barrel of a gun against leaders and nations that threaten dollar hegemony as the global reserve currency.
The battle lines have been drawn between sovereign governments and the legitimacy of cryptocurrencies, warned anti virus software pioneer John McAfee during the first global blockchain technology event in Hong Kong since China imposed a ban on cryptocurrency sales and trading on exchanges earlier this month.
Among core issues in the US$150 billion industry are how nations can apply taxation to cryptocurrency transactions and whether there should be curbs on the ability for bitcoin and other virtual currencies to facilitate global fund flows.
“Today will go down in history as the beginning of the war between the proponents of cryptocurrency and the world governments,” McAfee told the South China Morning Post of the growing conflict between governments and the “fugitives” subculture who back the development of virtual currencies.
What’s more, bitcoin’s status varies in different jurisdictions. Australia said it would remove the double taxation on transactions involving cryptocurrencies like bitcoin, while China has yet to define the legal status of virtual currencies.
“If governments aren’t able to know what the movement is they will be unable to collect revenues. That’s going to cause panic in some countries. China sees it already,” McAfee said. – South China Morning Post
The irony of course with McAfee’s view here is that he is a extremely strong proponent of Bitcoin and cryptocurrencies, but as a corporate CEO he has the pragmatism to realize that governments will not stand idly by should de-centralized currencies threaten their authority and hegemony.
Then there is the two-faced CEO of J.P. Morgan Chase Jamie Dimon, who not only recently lambasted Bitcoin in a public interview, but did so hypocritically when information emerged that his bank’s own brokers were profiting on the trade.
Yet with that being said, Dimon has a trump card up his sleeve as his connections to government give him the confidence that at any time the U.S. will crack down on cryptocurrencies the same way they do with any other un-controlled form of currency.
“Right now these crypto things are kind of a novelty. People think they’re kind of neat. But the bigger they get, the more governments are going to close them down,” Dimon said during an interview with CNBC-TV18 in New Delhi, India, on Friday.
Dimon was concerned that with bitcoin, ethereum and various Initial Coin Offerings (ICOs), there are now cryptocurrencies everywhere.
“It’s creating something out of nothing that to me is worth nothing,” he said. “It will end badly.”
Dimon warned that governments will eventually crack down on cryptocurrencies and will attempt to control it by threatening anyone who buys or sells bitcoin with imprisonment, which would force digital currencies into becoming a black market. – CNBC
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