Policymakers around the globe are enacting measures that make cryptocurrencies attractive to everyday investors.
Some of these policies were drafted to monitor cryptocurrency transactions. However, there are some rules that limit a person’s financial liberties. Thus, such laws add to the appeal of digital assets.
In this article, we reveal the three monetary policies that are bullish for cryptocurrencies.
Central banks of developed countries such as the U.S., Japan, the United Kingdom, and Switzerland have all employed their own versions of quantitative easing (QE) strategies over the last decade or so. The increased money supply in circulation was meant to stimulate lending and consumption.
However, the injection of large sums of fiat currency in the economy has the adverse effect of inflation. As a result, fiat currency loses value over time. For instance, the purchasing power of the U.S. dollar has been in a sharp decline since 2008.
This is bad news for ordinary citizens who are trying to accumulate wealth by saving fiat currency. However, these savers can protect their wealth by investing in store of value cryptocurrencies such as bitcoin.
In a Medium article, venture capitalist Nic Carter wrote that bitcoin is
the most transparent, auditable, debasement-free, and well-defined monetary system the world has ever known.
The key term in this quote is debasement-free. Bitcoin is a hard cap asset, which means that it has a finite supply of 21 million. Therefore, its inflation rate is bound to decrease over time. This property alone makes bitcoin an attractive store of value asset. It also makes the dominant cryptocurrency a reliable protection against the policies that drive down the value of your savings.
Governments around the world are increasing their efforts to regulate cash transactions. The reason behind this regulation is to discourage criminal activity and crackdown on tax evasion. In other words, the government wants a piece of every transaction you make.
European countries are spearheading the campaign to keep cash payments in check. Those who reside in France are no longer allowed to pay more than 1,000 euros in cash. Spain and Italy also enforce cash payment limitations, 2,500 euros and 1,000 euros respectively. In the U.S., cash settlements above $10,000 should come with a cash transaction report.
These laws make it difficult for citizens to keep their transactions away from the prying eyes of the government. This is bullish for privacy cryptocurrencies such as Monero and Zcash.
The co-founder of MarketOrders, Sukhi Jutla, agrees with our bullish sentiment. The gold investment platform executive said:
There is no doubt that Monero stands out from other cryptocurrencies because of the privacy it provides. This is one of the features and reasons for why I predict the price of Monero will increase in the next few months and has the potential to challenge Bitcoin.
Many wouldn’t want all of their financial transactions to be recorded. These people will be the ones driving demand for privacy cryptocurrencies in the future.
Many countries implement confusing rules when it comes to taxing cryptocurrency gains. As a result, some traders are staying away from the game until rules become more clear.
However, there are some countries that are taking the big leap in encouraging its citizens to trade cryptocurrencies. France and Portugal appear to be leading the world in this regard.
In France, taxes won’t be imposed on gains from crypto-to-crypto trades. However, you’ll have to pay the tax man once you cash out.
In Portugal, gains on the sale of cryptocurrencies won’t be subject to tax.
The clear rules regarding taxation in these two countries are likely to attract more people to engage in crypto trading.
Cryptocurrencies have been in existence for about a decade. So far, governments around the world seem to be contributing to their growth regardless of whether it is their primary purpose or not.
Last modified: March 4, 2021 2:40 PM