Global Cryptocurrency Control: When All Hands Have Been Shown (?)

Matvey Danilov, United Traders’ writer and observer, was closely watching the G20 summit and has identified something crucial for the future of cryptocurrencies. Total control is coming! Here are the details.

The G20 summit has finished in Buenos Aires the other day. From among many interesting things that happened during the event, I can’t help but mention a document signed by country leaders detailing the consensus of the top twenty powers of the world with respect to the cryptocurrency market. According to the declaration, the global movers and shakers have agreed to start developing a legislation in the not-so-distant future that is supposed to govern cross-border (!) principles for taxation of cryptocurrency transactions.

The document highlights that cryptocurrencies are gradually becoming a popular means of tax avoidance, a money-laundering mechanism for illegal gains, and a means of explicitly illegal payments made by bad guys and companies in favor of no less bad guys and companies. Now, that’s a surprise (pardon my temper)!

It is assumed that specialists that all signatories have at their disposal will do some serious thinking and as early as next year at the next G20 meeting to be held in Japan will present their thoughts on the subject. In a perfect scenario, their thoughts, highlights and concepts are to form the basis for an international draft law scheduled to be finalized in 2020.

To a large extent, the G20 leaders turned their attention to cryptocurrencies owing to observations shared last month by an expert group working under the G20 umbrella. The most breakthrough idea they shared is that cryptocurrencies constitute a direct threat to the global economy as they may become a real problem for conventional financial institutions if more and more people believe in crypto and, therefore, use it.

Although the current capitalization of the entire crypto market is chicken feed compared to the size of the global economy, you don’t really need to get your head down to understand why people and institutions ruling the world aim to seize control of the crypto industry. The phenomenon is new, unpredictable and sometimes totally incomprehensible. And by the way, any decent complex system interested in its own prosperity perceives without excitement anything that it’s unable to comprehend and digest. Therefore, one automatically turns to the wisdom of an unnamed warrant officer of an unidentified army: “If you can’t beat them, join them, [and eventually lead them].”

However, right at that moment a problem arises, and namely:

Blockchain as a whole, and cryptocurrencies in particular, are such a new thing, even by standards of today’s rapidly evolving world, that none of the governance mechanisms that governments are used to is absolutely inapplicable to cryptos.

Correct me if I’m wrong, but as far as I can see, any control over cryptocurrencies may be exercised only when the usual and crystal clear exchange occurs, be it crypto for goods, crypto for fiat, or crypto for a service in the real world. And, what’s important, all three hypothetical scenarios are extremely hard to monitor and track with the tools at hand.

The next problem is the cross-border nature of the potential legislation. Well, assume specialists come up with some magic law everyone is happy with (I have no doubt whatsoever that people whose advice is taken seriously by global leaders are professionals). Ok, fine, it happened. What’s next?

By what specific means will the governments be able to make sure that all of them play by the same rules? That no one will cheat on the rest?

I hesitate to speculate how those in power will solve the issue with defining scenarios that require attention exactly in case of a cross-border law designed to control the crypto market. Thank goodness, that is not my problem — good luck to those assigned to solve it, I have my popcorn ready.

In the case, however, this issue is solved (and I totally believe in creativity of smart people as mentioned above), the next thought to arrive in the head of these clever guys and girls would be this: “Let’s make a system to control blockchain-based currencies using a system built on blockchain!” And there will probably be nothing and noone to argue with. Then, it will be our turn to laugh out loud.

By the way, it is not only logical, it’s almost inevitable. Governments, should they dive into the space, will have to be sure about the rest of the players. The system has to be transparent where no one is able to cheat on the rest of the pack, where each party has to come to terms with the others realizing that all hands at the table have been shown. And either we’ll witness a dream come true and a miracle, where every country agrees with all the others, which would have an immediate and crucial effect on global geopolitics at large, or, the parties will take to the woods and announce in unison that they’d prefer controlling things where no one can cheat, and do so using familiar instruments that they’ve been using long enough to master how to cheat with them.

And an outcome like that would be a complete joke.

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