The Danger Posed by Cryptocurrency Regulation
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The U.S. government will often do whatever it takes gets its piece of the pie, especially when something new and exciting comes onto the scene. We’ve seen it time and time again, and the executive order signed by President Biden in March is clearly the first of several steps that will bring the IRS and regulators closer to your crypto wallet.
Why does the government want inside your crypto wallet?
The government’s stated reasons why it wants to peek into your crypto wallet and the real reasons it wants to get in there are two different considerations. The official position of the White House is that it wants to regulate cryptocurrency wallets because:
- There could be a heightened risk of money laundering in these wallets.
- These wallets could be used for criminal activities.
- It has virtually no oversight over these wallets, and it would like for that to change.
- It hopes to gain an edge in the global financial system by investigating and leveraging digital-asset technologies.
- It is exploring the possibility of a U.S. central bank digital currency (CBDC).
The government would very much like full transparency around the wallets so that it can properly tax any profits that traders may have made in cryptocurrencies. On the surface, that does not sound terrible, but the reality is that this could turn the world of cryptocurrencies upside down.