"Why, Mr. Anderson? Why, why, why? Why do you do it? Why get up? Why keep fighting? Do you believe you're fighting for something? For more than your survival? Can you tell me what it is? Do you even know? Is it freedom? Or truth? Perhaps peace? Could it be for love? Illusions, Mr. Anderson. Vagaries of perception. Temporary constructs of a feeble human intellect trying desperately to justify an existence that is without meaning or purpose. And all of them as artificial as the Matrix itself, although only a human mind could invent something as insipid as love. You must be able to see it, Mr. Anderson. You must know it by now. You can't win. It's pointless to keep fighting. Why, Mr. Anderson? Why? Why do you persist?" -- Agent Smith
The sound of inevitability.
One of the world's superpowers, China, recently announced some of the most drastic (draconian, as the Wall Street Journal put it) measures against Bitcoin and other cryptocurrencies. First, they issued a directive that all cryptocurrency ICOs (Initial Coin Offerings) are "illegal public financing" schemes. Then a week or so later, the superpower declared and banned all Bitcoin (and other cryptocurrencies) Exchanges. This meant that the government requested the Chinese exchanges to stop trading by the end of September 2017. Within days of the government making the declaration, Chinese Bitcoin traders moved their trades to Japan, in the process making Japan the world's largest Bitcoin market as it now accounts for 51% of the global Bitcoin market. While China's market share dropped to less than 7% (from 15%). Although the Chinese government wants the world to believe they are the superhero, in this case, trying to protect citizens from fraud, market manipulation, and unscrupulous trading, the opposite is likely true. They are doing it to protect their own interests, i.e. having control over currency.
China is not the only super power flexing its muscles. The U.S.A., through the SEC, earlier in 2017 issued findings from its investigative report into ICOs, the following stands out:
“U.S. federal securities law may apply to various activities, including distributed ledger technology, depending on the particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular [cryptocurrency] offer or sale.”
Also, like their Chinese counterparts, the U.S. government wants us to believe they are superheroes. Especially if you consider that the U.S. Congress has been reported to be working on drafting a new cryptocurrencies bill to "protect cryptocurrencies from government interference, while simultaneously ensuring that users meet minimum requirements to prevent these currencies from being used by criminals". In short, they will interfere.
What about the Kremlin, another superpower, you may ask? Well, earlier in September 2017, Mikhail Abyzov (Russia's Minister of Open Government) said the following:
"It is necessary to move from a policy of denial and prohibition to a very accurate, thoughtful state regulation of the turnover of cryptocurrencies. I think we should officially recognize them as a financial tool and properly handle it carefully so that excessive pressure does not destroy the technology itself."
Thoughtful state regulation, 🤔.
The situation is not much different in Afrika either. The Central Bank of Nigeria, during January of 2017, issued a circular to the country's financial institutions warning them on the use of virtual currencies such as Bitcoin, stating that the move was made necessary by the potential money laundering and terrorist financing risks that have often been associated with virtual currencies. Effectively, the Central Bank banned banks and financial institutions in Nigeria from transacting in virtual currencies.
In 2016, the Central Bank of Kenya also issued a similar notice warning the public against the use of virtual currencies such as Bitcoin. South Africa hasn't issued any warnings (yet) but has been testing some Bitcoin regulations.
I think we have found our
super heroes' super powers' kryptonite cryptonite.
Regulating ICOs and other somewhat centralized cryptocurrencies is possible. But regulating Bitcoin will prove difficult. Apart from the KYC process (Know Your Customer) that financial institutions (including Bitcoin platforms / Exchanges) are expected to abide by in some countries, it is quite difficult to see how governments will ban or regulate Bitcoin short of regulating the Internet. Also, as we've experienced over time, the Internet always routes its way around blockages and regulations.
It is going to be a battle of note, but as with the introduction of the Internet itself, I suspect in the long run Bitcoin will win this one.
This article first appeared on 25 September 2017 in the iAfrikan Weekly Digest Newsletter, a Pan Afrikan weekly digest of the most important stories of the week which includes insights and analysis on the most topical story of the week. Subscribe here to the weekly digest and receive it every Monday morning at 06h00 Central African Time.