Cryptocurrencies gained extraordinary popularity in 2021. Yet, a number of countries have decided to ban or heavily regulate these volatile assets for various reasons. In 2021, cryptocurrencies took the economic markets by storm. While some countries haven’t specifically outlined a strategy regarding cryptocurrencies, others have decided to ban these assets altogether. The most important economic actor to ban these digital currencies is evidently China.
In May 2021, the Asian country decided to ban Chinese financial institutions (mostly banks) from providing services relating to cryptocurrencies. And China isn’t alone. According to the Law Library of Congress report of November 2021, 51 countries have taken the step of banning cryptocurrencies, either implicitly or absolutely.
In addition to China, eight other countries have absolute bans on these digital currencies. Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia have all chosen to unilaterally ban exchanges and services surrounding cryptocurrencies. The majority of the other 41 countries that have enacted regulations around digital assets are in Africa or the Arabian Peninsula. More surprisingly, according to the report, the only country located in Western Europe with implicit bans affecting cryptocurrencies is Moldova. These regulations prohibit banks, lenders and any other financial institutions from offering services involving cryptocurrencies to their customers.
A pivotal year for regulation
Recently, India and Iran announced plans to create new legislation to ban cryptocurrencies. In its report, the Law Library of Congress lists 103 countries that subject digital currencies to tax laws, as well as laws governing money laundering and the financing of terrorism. All countries in the European Union have these regulations, except for Bulgaria.
It seems that 2022 is likely to be a busy year for lawmakers around the world. The need for regulation of these digital currencies is growing, and a multitude of countries have taken action on the matter this year. The creation of state-backed digital currencies should spur still overly-lenient leaders to enact new measures, even if the cryptocurrency world remains opaque and difficult to govern.