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Rising crypto adoption will temper regulation

Rising crypto adoption will temper regulation

Regardless of new rules central banks may set to govern their use, cryptocurrencies like Bitcoin will eventually trounce regulations as adoption rises leaving authorities no choice but to give up on their control, industry insiders have said.

For example, the South Africa Reserve Bank recently disclosed plans to limit the amount of local currency that can be sent out of the country using cryptocurrencies. The aim is to curb the use of virtual currencies to evade the country's financial regulatory controls.

Philip Agyei Asare, founder at Blockchain Foundation Africa and chief executive officer at BTCGhana says authorities are aware of the power cryptocurrencies offer ordinary citizens, but appear to still be fixated on "maintaining the status quo which means the constant championing of fiat and barring any possibilities of crypto adoption".

"Cryptocurrencies are built on libertarian principles and looking at the way governments around the world operate, there's the constant need to be in control of sensitive assets such as currencies. They are not willing to relinquish that level of control although with time widespread adoption will force them to."

Setting new rules could heighten animosity against cryptocurrencies like Bitcoin to "eventually reach epic levels,'' adds Irlon Terblanche, founder of Blockchain Capital (South Africa).

"With the unfortunate reality that there is nothing that a central bank, regulator or bank can do about it, Bitcoin will do to banks what the internet and email did to post offices; what Uber did to the taxi industry. It is just a matter of time. Eventually, Bitcoin will completely negate any government's ability to meaningfully implement capital controls and it will make it more difficult for central banks to implement monetary policies the way they currently do."

Terblanche bases his submission on the "various fairly-advanced innovations underway in the Bitcoin space.

"Applications running on the Bitcoin network continue to improve. Bitcoin continues to evolve. It is just a matter of time before its adoption will be felt by governments and banks."

Philip adds: "The best case scenario is for regulatory bodies and governments to leave cryptocurrency alone. They should allow it find its footing and warn citizens to 'trade at their own peril'. A free market approach to crypto will lead to faster adoption and better innovative use cases."

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