The Fate Of Crypto In 2021, Confirmed In El Salvador But Countries Prohibiting It Continue To Grow

In 2021, the number of countries that prohibit crypto will increase. (photo: doc. pixabay)

JAKARTA – 2021 is a good year for the cryptocurrency industry in terms of market performance. Even bitcoin has become a legal tender in a country, El Salvador. But last year also saw the number of jurisdictions banning crypto more than double since 2018.

A report from the Library of Congress (LOC) detailing the nine jurisdictions that have now implemented absolute bans on crypto and 42 countries with implicit bans. This number is up from eight and 15 respectively in 2018 when the report was first published.

The LOC is the research library for the United States Senate, which acts as the national library for the country.

In the context of the LOC report, an absolute prohibition means “transactions with or holding cryptocurrencies are criminal acts”, while an implicit prohibition prohibits cryptocurrency exchanges, banks, and other financial institutions from “dealing with cryptocurrencies or offering services to individuals/businesses dealing with cryptocurrencies.”

According to a Cointelegraph report, the nine new jurisdictions with the absolute ban are Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh, and China. China's crypto ban received the most attention in 2021, given that the country's largest bitcoin mine is.

The dramatic increase in jurisdictions banning or regulating cryptocurrencies over the past three years shows no sign of slowing down as several governments are currently reviewing their options.

In addition to the 51 jurisdictions with crypto bans, 103 countries have implemented anti-money laundering and combating terrorism financing (AML/CFT) laws, a threefold increase from 33 jurisdictions with such laws in 2018.

The Swedish financial watchdog and the Swedish Environmental Protection Agency are calling for a Proof of Work (PoW) mining ban by November 2021 due to the power demands and environmental costs of keeping the network running.

The ban was met with strong criticism from Paris-based Melanion Capital, which called claims against mining "completely misinformed."

Sweden's EU neighbor Estonia will also implement the AML/CFT rules in February. The new rules are expected to change the definition of what a virtual asset service provider (VASP) is and impose implicit bans on decentralized finance (DeFi) and Bitcoin (BTC).

The Indian government also created fear when lawmakers there considered a crypto ban last year. The result was not an outright ban, but a push to regulate cryptocurrencies as crypto assets, with the Securities and Exchange Board of India (SEBI) overseeing the regulation of local crypto exchanges.