Even as Latin America embraces Bitcoin, Southeast Asia is clamping down on cryptocurrencies
- Cryptocurrencies were seen as a fringe technology till a few years ago, but regulators are now taking a closer look.
- A large number of traders come from South Asia, but
cryptomines might migrate to the Americas amid the crackdown on mining in countries like China.
- Clean energy and monetary sovereignty seem to be the key concerns amongst regulators.
AdvertisementCryptocurrencies are designed to be borderless. But while technology and technologists may want to make it so, regulators are in two minds.
From an almost unanimous pushback against crypto a few years ago, regulators around the world seem to be easing in some parts, while others have taken a stance against cryptocurrencies, crypto mining, and crypto trading.
The Americas are embracing cryptocurrencies and their potential
The western hemisphere is very clearly the more crypto-friendly part of the world. El Salvador, which became the first country to give Bitcoin legal tender status on June 9, is just one example of this. The country has also been formulating plans to provide clean energy for crypto mining within its borders by leveraging its volcanoes.
Fellow Latin American country, Paraguay, has also shown interest in adopting Bitcoins into its monetary ecosystem. “As I was saying a long time ago, our country needs to advance hand-in-hand with the new generation. The moment has come, our moment. This week we start with an important project to innovate Paraguay in front of the world!” Carlos Rejala, a Paraguayan Congressman wrote on Twitter on June 7, merely a day after El Salvador’s President announced plans to legalize Bitcoin.
Como ya lo decía hace un buen tiempo, nuestro país necesita avanzar de la mano de la nueva generación.Llegó el mom… https://t.co/RTdz3zzLrN— Carlitos Rejala (@carlitosrejala) 1623029331000
Cheap power, the possibility of generating clean energy, and favourable regulations seem to be the main reasons why crypto companies are attracted to these nations. Highly subsidized power prices have also led to a mining boom in Argentina.
Crypto mining is the process of validating crypto transactions, which in turn creates new tokens on the blockchain. Miners run large data center-like facilities called ‘farms’, which generate a lot of computing power. Hence, not only do they need electricity to run them, but also keep the systems cool.
Facebook’s Diem, which is expected to become a blueprint for the US’ official central bank digital currency (CBDC), announced plans to launch a dollar-backed stablecoin on May 12. Yet another sign that companies expect favourable crypto regulations from the world’s most powerful nation.
Things aren’t as rosy on the other side of the world
AdvertisementBut as much as one half of the world seems in favour of regulating crypto and keeping it alive, the other half seems to be against it. China, the country that houses most of the world’s Bitcoin mines, recently started a crackdown against these firms. The country doesn’t just have reservations about money laundering and sovereignty of its currency, it also has environmental concerns from crypto mining’s energy requirements.
Central banks in India and Indonesia too have shown concerns against crypto recently. The Reserve Bank of India (RBI) issued an informal guidance in May, asking lenders to stop doing business with crypto exchanges and firms. Indonesia’s central bank, too, said it would not accept cryptocurrencies as legal tender.
As much as South Asian countries may oppose cryptocurrencies, they do not oppose blockchain technology overall. In fact, the RBI had detailed plans to build its own CBDC earlier this year, while China became the first country to test a CBDC long ago. The country already has test processes for a digital Yuan running in some areas within its borders.
The world being split may be a good thing though. Cryptocurrencies were considered a fringe industry as early as two years ago, the mere fact that regulators are split shows more acceptance, and could pave the way for regulations — even if they aren’t always favourable.
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