How Bitcoin Value is Affected by National Regulations: Exploring the Global Risks in Monetary Policy 


In the age-old world of international monetary transactions, cross-border payments are never a clean and easy process. They require border organisations called correspondent banks to act as intermediaries for an ever-increasing number of personal transactions. For quite a few years now, the going price for these intermediaries has been costlier than $5-$10 each and every transaction on each side of the deal (in other words, per percentage).

“Is Bitcoin worth Mass Adoption”?

With swathes of individuals previously holding Gold as their go-to resource for olden days’ depository purposes, while others kept USD in their particular needs due to regional incompetence with regard policies and regulations, Bitcoin seems to be option that everybody can live with. That is until governments decide how they will be regulating it in the future!

The market of cryptocurrency has been pressuring global regulators with the increase in cryptocurrencies since 2013. Financial officials have a hold of currencies and digital encoding methods, which means that in times of hardship, they can issue more money to stimulate the economy during recessions. 

Bitcoin Regulations or Crackdown? Central Banks Debate Future of Cryptocurrency in Response to World Politics 

In January of 2018 bitcoin likely crashed due to a trend in South Korea. Regulators have taken notice of this and the US Congress has released articles defining Bitcoin, cryptocurrencies and blockchains to understand these technologies better. Congress also is setting up a few task forces to figure out how they will regulate bitcoin transactions including transactions with foreign entities. While сentral bank organizations like the IMF are working on implications that include “global regulatory arbitrage, anti-money laundering, risks of cybervirtruialr financial crime and risks at the retail space.” One article suggests that central banks can regulate ICOs which could lead to backlash to establish cryptocurrency regulations instead of regulation or crackdowns

Some predict that governments will not be able to stop cryptocurrencies from altering markets. The question isn’t whether or not there should be a Bitcoin regulation. It’s what shape they should take.

The future of cryptocurrencies in the global economy largely depends on how central banks respond to the end of the era of “too-big-to-fail.” They need to decide if they want bitcoin and other virtual currencies to complement, supplant, or come to replace sovereign currencies.

Bitcoin regulation is starting to touch every industry from finance, economics and trade, hospitality and tourism which can have huge ramifications for these sectors.

Therefore it is important for states to debate on whether or not virtual currency usage should be allowed within their border before the next international compromise appears.

Understanding the Dynamics Between Cryptocurrency Price Swing and State Control over Finance

We should understand how governments, banks, and central and regional banks work to see the effects that they have on cryptocurrency price swings.

Governments and banks are afraid that the cryptocurrency movement is causing people to lose confidence in inflationary currencies. So, they could easily deploy policies to limit access to the dominant systems of currency trade. Central bank monetary policy is less predictable, which caps the upside potential of cryptocurrency appreciation.

In 2005, China banned the production and use of “junk” non-legal tender economic participations which is the name has been generally applied to private, de facto currencies in use in China. Subsequently, state control firmly established over finance.

This may have had a negative effect on real estate as new housing starts plummeted and prices dropped 12%: there are at least two factors such as stressed liquidity worries and expectations that suspending domestic investment turned out to be a prudent move by Beijing.

Recently, news of countries regulating their financial sector or managing cryptocurrency better has led to a massive sell off in cryptocurrency and its devaluation. Also the potential for people to trade between government-controlled currencies such as US dollars and cryptocurrencies can create more demand and equality between government currency holdings.

Cryptocurrency prices have volatile short-term behavior (both swing positive and swing negative) that can be attributed primarily to the trading of currencies through exchanges like Bitcoin bank with little oversight, regulation and oversight by governments.

Examining Ethereum Price History & Government Reaction Towards Crypto-currencies

Government reaction towards cryptocurrencies has been overwhelmingly negative; this is evidenced by country public officials’ responses towards the technology, regulation strictly against cryptocuriaries, heavy fines for violating regulations, and questionable tax laws for profits. (Chowdhry 186)

Master of Reality though has foreseen a future trend where political leaders will come out and support blockchain technologies as well as consider beneficial frameworks for cooperations with crypto-currencies instead of taking authoritarian approach which harms businesses.(chowdhry 187)

The interest for cryptocurrencies and their use as a medium of exchange is seen at an all-time high. The ETH price has been changing alongside the interest from governments around the world.

Some countries are under the impression that digital currencies have too many dangers and are skeptical to issue them for their citizens. Although there is no comprehensive legal framework around the production, sale or regulation of digital assets, there has been a lot of discussion globally among regulators and central banks. 

Summing it up!

Cryptocurrencies represent risk not only because they are volatile in terms of value but they also expose consumers to fraud risk through lost passwords, stolen wallets and hacker attacks. However, governments seem to believe that giving better clarity on how digital currencies work could change people’s feelings towards these assets.


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