The Heavy Hand of Government Regulation Looms Over Cryptocurrencies

The Heavy Hand of Government Regulation Looms Over Cryptocurrencies

Written by Nathan McDonald, Sprott Money News


Over the past couple of days, Bitcoin and all other cryptocurrencies enjoyed a much-needed rally. Confidence was building once again and things were appearing to get back on track. The bull market was back on!

That is, until government officials and central banksters had their say.

Let me repeat something that I, and many others, have stated for years: The more successful cryptocurrencies become, the more of a threat they are to the establishment. The financial elite derives the majority of their power from an ability to endlessly print fiat money out of thin air.

This power is undeniably vast, and therefore it comes as no surprise to me that the eye of "Sauron" is now being turned on cryptos. This is a space they have been watching skeptically for some years now. The FED has kept a watchful eye—and so, too, have others.

This watchful eye has turned to “jawboning,” a common tactic used by central banksters the world over. They love this strategy, as it requires getting no blood on their hands. By simply speaking positively—or in this case negatively—about a market, they can send it either soaring or plummeting. We’ve witnessed this strategy countless times before, when they discuss gold, the markets, or interest rates. It just so happens they are now turning their sights on the hottest market any of us have seen in our lifetimes: cryptos.

One of crypto's greatest assets is the fact they are not controlled by any one government; they are largely unregulated and de-centralized. As a result, all kinds of legitimate, dark and grey money flow into this space.

This has made countless millionaires out of small-time investors over the past year, many of whom are likely attempting to dodge the taxman any way they can.

Now, Bitcoin and other cryptos have suffered another major setback, falling 20% overnight due to continued crackdowns from China and increased hostility by South Korea, both of which make up an incredibly large portion of the global market for cryptocurrencies.

South Korea's finance minister, Kim Dong-Yeon, even went as far as to state that a "cryptocurrency exchange shutdown is still an option" —an action that is already having dire consequences for the markets, even though it has not yet played out in actuality.

Central bankers the world over are now stuck between a rock and a hard place.

Do they:

A) regulate and clamp down on cryptocurrencies, sending them once again into the black market, where many will continue to be traded, albeit at short-term lower prices? Or do they:

B) allow cryptocurrencies to be embraced on the open markets, attempting to tax and regulate as much as possible—risking the possibility of cryptos overtaking their fiat money due to Gresham's law

My guess is some countries will fully embrace the crypto space, hoping to become central hubs of trading in this market, as Wall Street and London are for the broader markets. While other countries, fearing the worst, will continue to ratchet up their rhetoric against Bitcoin and every other alt-coin.

However, there is a third scenario—the most sinister and frightening.

C) Central banks, seeing the value in this purely digital currency, will issue their own Frankenstein cryptocurrencies and clamp down on the existing market—moving to a purely digital-based fiat money world, one of their greatest dreams.

Option C is truly the scariest, and this timeline must be resisted at all cost. The power and control this would offer a government is truly absolute. Abuse would be rampant and unjust. In essence, they would own you through their ability to control your flow of money, whenever and however they wish.

Regardless of what unfolds from this point on, 2018 is shaping up to be a roller coaster of a ride—not only for cryptocurrencies, but for gold, silver and the markets as a whole. We are now smack dab in the middle of a once-in-a-lifetime revolutionary change in how markets function and operate.

Strap yourselves in. This is going to be a bumpy one.


Questions or comments about this article? Leave your thoughts HERE.


The Heavy Hand of Government Regulation Looms Over Cryptocurrencies

Written by Nathan McDonald, Sprott Money News



Check out these other articles by our contributors:

Speculating Our Way to Prosperity - Keith Weiner (16/01/2018)


“Everything is so vulnerable.” — Eric Sprott on the weak dollar, flawed Intel chips, and his “stock of 2018.” (Weekly Wrap-Up, January 12, 2018)


The Blockchain Name-Change Game And Securities Fraud - Dave Kranzler (12/01/2018)







everything1 Tue, 01/16/2018 - 18:15 Permalink

I believe governments are issuing their own, but are people buying them, or are they even selling them yet.  I'm really surprised places like Amazon are not issuing their own, only crypto that has some kind of legitimacy to it, as in also capping it, or getting it involved in a share structure type of scenario.

But, that may defeat the purpose of the ponzi nature of it, where as long as people keep piling in, the pot grows.  However, we are finally seeing a nice pullback in crypto's which will probably continue, and once to many people get burned, watch out below.

Bluntly Put Tue, 01/16/2018 - 18:45 Permalink

The power and control this would offer a government is truly absolute. Abuse would be rampant and unjust. In essence, they would own you through their ability to control your flow of money, whenever and however they wish.

Since anyone can code an encrypted database, they will impose cap and trade regulations limiting people's power so they cannot mine new coins or process existing coins.

So then they control both money and power. Real wealth is wealth with no counter party risk, land, food, pm's, ammo, the usual deplorable stuff.

qr259100 Tue, 01/16/2018 - 19:51 Permalink

CloudCoin will own this market in a few years. CloudCoin is ready made for transactions. Bitcoin is a fantastic idea as it potentially gets the money out from under the control of the governments. But it has flaws. The block chain is getting to big to handle so transaction times are getting longer, new quantum computers will be able to crack the encryption and are probably already doing it. It isn’t truly private the public ledger is, well public. I could go on.

For a full analysis of the differences between Bitcoin and CloudCoin and the flaws of the block chain check this site out.

Get a free book called “Beyond Bit Coin” and 5 free coins here.

Victor999 Wed, 01/17/2018 - 00:57 Permalink

Those who believe bitcoin is untouchable, take note.  You are free to hold bitcoins - the government can not stop that.  But the government can regulate both ends of the bitcoin cycle - purchase, hold, spend.  They can regulate the purchase of bitcoins by forcing compliance on the exchanges - indeed, they can even close the exchanges.  They can regulate the spending (at least in the wider, more public markets).  They can even make it illegal to deal in bitcoins if they choose, making it illegal to sell something if bitcoins are used as currency - most businesses would be forced to comply I know of few businesses outside the black markets that would go against government regulation.


Bitcoin is monetary freedom only if the government says it is.  Never forget that.

Fed-up with be… Wed, 01/17/2018 - 01:50 Permalink

What should give us ALL pause, is the QUIET FED, the QUIET US Treasury.  Are they:   a) Scared?   b)  IN CONTROL of this market?  OR???

FILL IN THE BLANKS as I am not smart enough for the nuances.   I am simply at awe that it is CHINA and SK and other countries acting first.   This may be coordinated.  Sorry if I sound confused, because I AM!

U. Sinclair Wed, 01/17/2018 - 02:52 Permalink

Maybe it is naive to think that governments and banks will allow people to step outside their system and disrupt it completely.
Besides that, 95% of the population has got no clue what is going on.
They only here Wild West stories about Bitcoin and Co and they have no idea what is about.
When the governments and central banks step in because they say the crypto's are a threat to the current money system and ban them because it is best for the people, 95% of the population will accept that explanation.

Can crypto's been banned?
If a government decides to make trading or possessing Bitcoins/crypto's illegal, questions will be raised about how exactly it will enforce such a ban.
It is impossible for a government to seize your Bitcoins/crypto's, unless you decide to handover your private keys.
However, the fast majority of citizens and institutions like to stay on the right side of the law.
So the demand for Bitcoin/crypto's would plummet if the government decided to ban it.
All exchanges in that country would also be shuttered and buying/selling Bitcoin/crypto's would be very difficult and risky without expert technical knowledge.
This would suffocate Bitcoin/crypto's in that country and the government’s objectives might be achieved.
Then central banks step in and offer their own crypto coin, how convenient for them.
No more cash and everybody is locked up in traceable digital digits.
Convert some of your crypto's in precious metals en hide them from your government.
They will be very valuable once all the cash is removed from the system eventually.
Just in case the scenario unfolds like described above.
Some things to take into account.

theprofromdover Wed, 01/17/2018 - 04:22 Permalink

Assuming the Establishment is not going to stand still and be by-passed-

Well, say it is Government that decides to enter the cryptocurrency world. Government is easier to remove than the Bankers, so maybe a fate more manageable. If the Bankers take over -which they are desperate to do whatever Jamie Dimon says (but he's not a banker, he's a bagel salesman on a street corner), then we'll never get free.