Following President Trump‘s poor assessment of cryptocurrencies, speculation has been rife in the industry on whether or not Washington could stifle the industry with a blanket ban.
Popular economist and stock trading expert Alex Krueger, believes while the President could toy with the idea, the current laws make it very unlikely for him to impose such a ban.
According to a Twitter thread on the issue, Krueger pointed out that while an outright ban might be difficult to pull off, Washington has the resources to curtail the asset’s functionality to a certain degree.
Bitcoin is Inherently Immune. Exchanges Aren’t
To begin with, the economist pointed out that Bitcoin is code. This translates to it theoretically being free speech, and since the First Amendment of the Constitution prevents a ban on free speech, Bitcoin’s inherent nature axiomatically means that it can’t be banned.
2/ Bitcoin is code. The US government cannot ban code
(source: https://t.co/3LeQend7BG) pic.twitter.com/NHkkdcNff2
— Alex Krüger (@krugermacro) July 15, 2019
However, POTUS could find a workaround. The government can deem cryptocurrencies as being too volatile, preventing them from being sold to retail investors. Such a move could batter the balance sheet of cryptocurrency exchanges, who make the bulk of their revenue from fees taken from retail traders on their platform.
That particular precedent is especially terrifying, given that Trump himself has recently expressed his opinions that Bitcoin and other crypto assets are “volatile,” and can be used for “facilitating unlawful behavior, including drug trade and other illegal activity.
Pretty much the usual criticism. What if your money was stuck in crypto forever? With no way to convert it back to fiat? Krueger believes the President could also target the exit points for traders. He said:
“Trump could also go after fiat onramps, by simply forbidding banks to service crypto exchanges, or by requiring banks to not service exchanges unless conditions XYZ are fulfilled (and make that practically impossible).”
If he does this, then it’s pretty much game over for exchanges. A similar case can be found in Poland, where financial authorities have taken a rather harsh stance towards crypto companies. The resulting environment saw the exodus of several exchanges, including BitBay, the largest in the country at the time.
A Crypto-Friendly Congress Could Come to Bitcoin’s Rescue
Congress to the rescue again. Imposing a ban on cryptocurrency activities would require Trump convincing the United States Congress that cryptocurrencies are dangerous to the economy. However, given how much love crypto has gotten from Congress already, this seems highly unlikely.
Multiple bills have been introduced by lawmakers concerning blockchain technology and cryptocurrencies themselves, with the latest of them being the “Safe Harbor Bill,” one which aims to provide a safe harbor to investors who are unable to properly account for hard forks while filing their tax returns.
Blockchain has received some goodwill as well, as the U.S. Senate Committee on Commerce, Science and Transportation approved the Blockchain Promotion Act last week.
The act is expected to move the U.S. closer to provide a clear blockchain definition at the federal level, and it establishes the blockchain as a working group under the Department of Commerce as well.
So, while Trump might have a personal distaste for Bitcoin, the presence of Congress- as well as the inherent nature of the asset itself- could be just enough to prevent that from happening in the near future.
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