Failing Cryptocurrencies

This weekend, the value of Bitcoin crashed by over 10%. The event wiped off $200 billion of investor money from the crypto market in just 24 hours. For the last many weeks, Bitcoin and other cryptocurrencies are in a freefall. Just before the $200 billion crash, Bitcoin received a major setback.

Proposed Ban in Russia
The Central Bank of Russia proposed a ban on trading, mining and usage of all cryptocurrencies. The proposal tabled by the Russian central bank primarily emphasises the risks posed to the financial stability and well-being of the Russian citizens by the volatile nature of cryptocurrencies. This risk, in turn, also threatens the financial stability of the country, says the bank. Besides, the proposal also says that cryptocurrencies are leading to a potential bubble in the market, and a bubble burst could significantly impact the country’s investors.

Moreover, the proposal even raises the issue of the extensive use of cryptocurrencies in several criminal and illegal activities. The proposal is soon expected to translate into a government ban in Russia.

Crime and Cryptocurrency
Taking further the last stated point, famous blockchain researcher Chainalysis has reported that in 2021 cryptocurrency-based crime reached a new all-time high of $14 billion. From $7.8 billion in 2020, the figure has almost doubled.

North Korea
When talking about cybercrime, it is difficult to skip one name – North Korea, a proxy state of China. Last year, South Korea had revealed that North Korea daily launches over 1.58 million cyberattacks across the world. Also, a United Nations report stated that North Korean cyber theft cost the world $300 million and that the North has funnelled this looted money to bankroll its banned nuclear and ballistic missile programmes. Now, in 2021, North Korea has stolen $400 million in cryptocurrency, reported Chainalysis.

Power Guzzler
The report of the Central Bank of Russia tabled to ban the cryptos has a mention of another issue that has been under debate for quite some time. It says that ‘cryptocurrency mining’ is putting a heavy load on the regional energy grids as the process is highly energy-consuming.

Coinciding with Russia, Erik Thedeen, the Vice-Chair of the European Securities and Markets Authority, has called for an EU-wide ban on crypto mining. He has cited the example of Sweden, where energy usage by ‘power guzzling’ crypto exchanges is becoming a national issue. Besides, Kosovo has banned cryptocurrency mining recently to save electricity.

Global standing
Last year, US Treasury Department said that it would need any cryptocurrency transfer worth $10,000 or more to be reported to the IRS. This was done to limit illegal activities and tax evasions using cryptocurrencies. Besides, China has recently entirely banned cryptocurrencies. Overall, 42 countries have now partially or fully banned cryptocurrencies. The countries with a complete ban include Egypt, Qatar, Oman, Bangladesh, Iraq, Morocco, Algeria and Tunisia.

As a result of increasing volatility in the cryptocurrencies market and government crackdowns in several countries, experts are urging investors to remain highly cautious and gauge the direction in which cryptocurrencies are heading.

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