Germanys central bank has pointed out that efforts by individual nation-states to regulate bitcoin are hampered because their ‘citizens’ can always find ways to access bitcoin through portals in countries where bitcoin is not regulated. The bank’s answer is that there needs to be a worldwide regulation on what they are calling “virtual currencies .”
Choosing the word “virtual” is not an accident, it’s a discrediting, invalidating word chosen to send a subliminal message that cryptocurrencies are not “real” currencies. Only currencies printed by paper at the whim of a central bank are legitimate currencies. Right.
On one hand you can look at this as a threat to cryptocurrencies. You can look at cryptocurrencies as ushering in the very opposite of what was intended at the birth of bitcoin, the undermining and avoidance of coercive associations, nations-states. World governance of bitcoin could nudge us towards a world government.
On the other hand, and this is where I am at, this admission by this central bank will not ultimately help to create an actual world governance entity on bitcoin, but it will serve a notice to other nation-states that regulating bitcoin is next to impossible because, in my opinion, the notion that the entire world will get together to shut down and control bitcoin seems far-fetched.
There will almost always be some up and coming nation-states that will see a great advantage in filling the bitcoin void that might be created wherever other nation-states decided to join one another to regulate and/or ban bitcoin.
Any attempt to regulate cryptocurrencies such as Bitcoin must be on a global scale as national or regional rules would be hard to enforce on a virtual, borderless community, a director at Germany’s central bank said on Monday.
National authorities across the globe, and particularly in Asia, have attempted to put the brakes on a global boom in the trading of Bitcoin and other cryptocurrencies – a form of digital money created and maintained by its users.
But Joachim Wuermeling, a member of the board of Germany’s Bundesbank, said national rules may struggle to contain a global phenomenon.
“Effective regulation of virtual currencies would therefore only be achievable through the greatest possible international cooperation, because the regulatory power of nation states is obviously limited,” Wuermeling told an event in Frankfurt.
Chinese regulators have banned initial coin offerings, shut down local cryptocurrency trading exchanges and limited bitcoin mining – but activity has continued through alternative channels in China despite the crackdown.
South Korea, where speculation on cryptocurrencies is also rife, is working on plans to ban virtual coin exchanges.
European Union states and legislators agreed last month on stricter rules to prevent money laundering and terrorism financing on exchange platforms for bitcoin and other virtual currencies.