In the first part of this article, we dug into bitcoin bans by authoritarian governments, the narrative behind them, and how the country’s crypto users reacted during 2021.
Related Reading | Crypto Regulations Newsletter: A Tale Of Tyrannies & Bitcoin (1/2)
Ban Risky Bitcoin
Tyrannies, scared of the power of crypto’s decentralization, often claim it possesses many risks to the investors and the economy.
But, as we’ve been seeing, the bans are not actually about crypto as a risk to the people.
Some of these governments (China and India) have also taken measures to reduce cash, replacing transactions with a central bank digital alternative: more surveillance.
Crypto also possesses another real risk to regimes: it has been used to fund protest movements. Not “terrorist movements”, as dictatorships love to call it, but “protests” against real systemic issues. Against police brutality, hunger, and other types of violence.
Oppositions tend to be persecuted in these countries by any means necessary. People’s funds get frozen if they protest. Banking systems help silence revolutions and the fight for the basic human rights to be respected.
But tyrannies can’t freeze protestors’ BTC. There’s your real risk: no government oversight.
Can Bans Stop Crypto?
Miners and their equipment are in the physical realm, so they can be sent to jail. But digital assets like BTC, because of the way its tech works, would require a high level of control over the internet, like China’s Great Firewall, to actually keep citizens away from it.
When facing bans major exchange platforms do have to comply with restrictions, thus adjusting their policies accordingly. In the case of China, for example, Binance had to close the yuan trading feature and other exchanges like Huobi started to retire mainland Chinese users.
However, despite the crackdowns, some of these countries have reached the highest BTC adoption rates on the planet afterward.
In May 2021, a report by CryptoRefills showed that “The top 3 countries with the most crypto-consumers are the USA (7.6%), Nigeria (6.6%), and India (6.2%)”.
Nigeria ranked 6th again in August, according to the Chainalysis’ 2021 Global Crypto Adoption Index, and the number of cryptocurrency trades in Turkey has increased to over one million per day, reported Reuters.
China’s cryptocurrency miners had to migrate to cheap and safer places for mining –which benefited other countries, like the U.S.–, and some users reportedly have found ways to keep investing by registering companies overseas so the know-your-customer (KYC) can’t stop them from trading as a corporation.
In 2021, many investors, subject to these tyrannies, found ways to keep trading with P2P platforms, and some have claimed the irresponsible restrictions only enhanced cybercrime. Scammers will scam.
But The Venezuelan Tyranny Loves Crypto
Venezuelans endure a dictatorship and the worst economic crisis of their history.
As Time reported in 2018 when the regime made their first approach to creating a digital currency, they tried to “mutate and centralize Bitcoin’s concept of peer-to-peer digital money to create state-controlled cryptocurrencies like the Petro” in order to evade U.S. sanctions –and other less transparent goals.
The country’s government-linked crypto exchange platform recently listed BTC and litecoins, but nothing in hands of dictatorships is as good as it sounds. Even when it sounds bad, it gets worst.
The Venezuelan government is believed to be one of the biggest drug organizations in the world. That should give you an idea of how corrupt they are. So imagine a drug cartel / corrupt politicians having their own digital currency. Sounds safe and trustworthy, right?
As ever, the project has never been clear enough when explaining its details. First, they said it’s backed by oil, but claims were hollow. The Conversation described it as “simply a digital form of debt from a country with no financial credibility and that is badly mismanaging its economy.”
Unsurprisingly, the Petro has not fixed any issue or met its promises. Many users have claimed to have been scammed in the platform and it is allegedly possible to get banned from it with no explanation whatsoever, all funds frozen with no hopes to see them again.
The moral of the story is that tyrannies are not faced forward about their plans and use trends and digital assets to make shady moves look a bit better –and possibly scam some more peers.
Don’t believe in regimes that sell you [fake] crypto, don’t believe in [fake] crypto sold by regimes.