If the U.S. government decides to ban cryptocurrencies, this would trigger a series of complex consequences with far-reaching impacts on the cryptocurrency market and the global economy. The government could implement this ban through a variety of means, including restricting crypto trading, cracking down on related technologies, and strengthening supervision. Here are some possible results and impacts:
A comprehensive ban could trigger drastic market fluctuations. Banning cryptocurrencies could cause prices to plummet as a large number of holders would rush to sell their assets. This situation would force the market underground, with trading activities shifting to more secretive channels, reducing transparency and increasing the risk of illegal transactions.
Measures to ban cryptocurrencies could involve attempts to attack the Bitcoin network, such as conducting a 51% attack. Since the two major mining pools control more than 50% of Bitcoin mining computing power, in theory the government could try to integrate computing power to carry out an attack. However, it is almost impossible to actually carry out such an attack because of the huge computing power and coordination required. As early as 2014, Andreas Antonopoulos, author of "Mastering Bitcoin," explained why it is difficult for countries to control Bitcoin.
Read more: El Salvador cold wallets purchase 1 BTC per day since March and have surged to 5,850 BTC
Privacy coins such as Monero XMR and zero-knowledge proof coins ZEC have been banned in multiple countries. Regulatory crackdowns could cause these coins to be delisted from centralized exchanges (CEX), resulting in reduced liquidity and lower adoption. Countries such as Japan, South Korea, and the UAE have already banned these privacy coins, and the European Union is considering a similar ban.
China's comprehensive ban (including a ban on crypto trading, mining, and related financial services) is a notable example. In 2021, China declared all crypto trading illegal and banned related activities. Although the ban caused the Bitcoin network's computing power to drop by nearly 50%, computing power quickly recovered as mining moved to other countries. China's ban has hindered the development of cryptocurrencies, but it has also promoted the transformation of the crypto industry.
Banning self-hosted wallets will seriously affect users' financial sovereignty, making them dependent on third parties who may freeze their accounts. If the government bans self-hosted wallets, users may turn to regions that do not enforce such bans, which may lead to regional fragmentation of the crypto market.
Governments may launch central bank digital currencies (CBDC) as an alternative to controlling the financial system and providing a legal digital currency option. The launch of CBDC will change the way financial transactions are conducted and may weaken the demand for private cryptocurrencies.
In 1933, the US government banned private gold holdings. Despite the implementation of this ban, only 20% to 25% of gold was handed over to the authorities. The ban led to wild fluctuations in the price of gold, and the value of the US dollar against gold fell by more than 40%. The wealth of individuals holding gold increased significantly. This suggests that if the United States and other countries implement cryptocurrency bans, similar market fluctuations and economic effects may occur.
As the price of Bitcoin fluctuates, a growing number of companies have seized the opportunity to accumulate the cryptocurrency, further solidifying Bitcoin’s place on corporate balance sheets. Following Bitcoin’s all-time high in March, at least six companies—including five publicly traded ones—have collectively acquired 48,836 BTC, an investment estimated to be worth around $3.1 billion today.
WilfredBut with one step forward, it seems that China has taken two steps back according to a speech given by former finance minister Lou Jiwei at the prestigious Tsinghua WuDaoKou Chief Economist Forum in Beijing.
XingChiFormer Binance CEO CZ's first tweet after his prison release sparked attention, briefly mentioning future plans and enjoying freedom. BNB surged to a monthly high but quickly reversed, declining along with the broader crypto market.
KikyoChina's central bank announced a number of stimulus measures this week, creating liquidity conditions that analysts believe will help boost bitcoin prices.
AlexRobert Kiyosaki warns of a financial crisis influenced by AI, urging investment in Bitcoin and silver. He predicts Bitcoin could reach $1 million by 2030, advocating for safe haven assets.
EdmundChina’s aggressive stimulus package may stimulate global liquidity, but the country’s ongoing ban on cryptocurrency trading limits its direct impact on Bitcoin and other digital assets. While some crypto investors remain hopeful that the influx of liquidity will ultimately benefit Bitcoin’s price, significant gains have yet to materialize. With global markets closely watching both China’s economic recovery efforts and the crypto industry’s resilience, the next few months could prove pivotal for both sectors.
WenJunChina has shown great resilience, controlling more than 55% of Bitcoin mining despite ban.
XingChiSweden's authorities are cracking down on unlicensed cryptocurrency exchanges involved in organised crime and money laundering. They are also targeting Bitcoin mining operations, uncovering 90 million SEK in unpaid taxes from 18 firms.
WeatherlyA Bitcoin whale wallet was reactivated after nearly 11 years, sparking speculation of a connection to Satoshi Nakamoto. Data shows an increase in both large and small wallets, while mid-tier holders have decreased, reflecting a changing Bitcoin market.
WenJunElon Musk and President Nayib Bukele discussed global innovation and technology but avoided crypto conversations during their meeting in Austin. Musk praised Bukele’s leadership, while El Salvador’s Bitcoin investments continue to show positive returns.
WenJunThe unwinding of the Yen carry trade has been a significant event in the financial markets, leading to unexpected movements in asset prices.With the Yen carry trade now appearing unstable, it’s time for investors to consider alternative strategies. Here’s what to watch next.
WilfredWhy did the cryptocurrency market lose 15% of its value over a weekend? Thanks to the Bank of Japan for playing a starring role.
JinseFinanceJapan, Federal Reserve, the end of the yen carry game: the global market ushered in Black Monday, the Japanese stock market plummeted 12%. Golden Finance, the butterfly flapped its wings, triggering a tsunami in the global financial market.
JinseFinanceThe carry trade has broken down, and in any case, the game is over for Japan.
JinseFinanceN. Korean hackers employ thousands of shadow workers that pose as recruiters or potential employees to infiltrate crypto firms.
OthersHe has not offered any explanation on the matter, and the crypto community has begun speculating.
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