In this article I shall focus about the BRICS nations as they are the largest emerging economic bloc.
There have been talks of banning, opening up and re-banning the crypto-sector in India. Similarly there have been ambiguous laws about cryptocurrencies in china - which for the most part controls the entire mining network of Bitcoin, and possibly many other networks with the largest mining companies and hardware producers, exchanges operating from China or by Chinese nationals. In fact the largest crypto-exchanges both by daily trade volume and by market capitalization are operated by Chinese nationals (or former Chinese nationals). Some of the largest cryptocurrencies are operated by Chinese nationals as well. Another case is that of Russia, that has invested a lot of time in legalizing and to some extent regulating cryptocurrencies. Similarly Brazil hosts some of the most innovative blockchain experiments including legalizing land records on blockchains. With all such innovations happening,
Why should BRICS economies care about this technology?
- Firstly, Cryptocurrencies are slowly becoming an alternative financial asset, similar to gold, diamonds, platinum - only that its properties make it more difficult to detect, control and ban. Even if countries were to legally void out cryptocurrencies, the ease of owning these assets for any individual or citizen would make it difficult to detect or control. In India during the 1980's and 1990's the government had imposed tremendous amount of taxes on importing gold, which led to an increase in gold prices, while giving birth to a whole range of gold-ornament firms - some behemoths worth more than several billion dollars just because they were able to "bring in" or "arbitrage" gold prices from international markets. Such legal requirements often - at the cost of preventing - normal retail customers from acquiring an asset will create an elite set of individuals who will possibly monopolize this market. Banning any economic asset for ever - has never been a possibility historically....
- Secondly, stifling innovation in sectors that are heavily corruption ridden or asymmetric information driven, with virtually no legal oversight creates a bane to society. For example, the real estate sector and property registration issues in the emerging economies have long been an eyesore to the efficient functioning of markets due to heavy policy dependence. Decentralizing and plugging in blockchains has demonstrated significant efficiency into this sector.
- Thirdly, being home to the largest technically capable information technology specialists in the form of programmers, designers and creators of software, these economies can rapidly scale to true products as has been demonstrated by many large exchanges and DeFI innovations that are shaping today's world. If governments were to ban this technology or its associated crypto-currencies, they would be denying this huge population of technology professionals a true first chance at the leap. For long, hugely regulated telephone networks, service delivery systems such as utility had bought India and Brazil to a bottleneck. By the time liberalization happened - overnight after realizing the benefits of these technologies, it led to rampant "renting" by few vested parties denying ordinary citizens of the true right to access.
- Fourthly, proper regulation and appropriate enforcement of financial instruments in this sector will lead to a huge tax collection for the government. An outright ban would leave huge amounts of money on the table. Not only that, properly regulating exchanges and using intelligent platforms such as chainanalytics and other financial tracking systems, money flows can easily be tracked back to owners much more easily than physical assets that are often hidden behind layers of owners. Thus proper financial regulation will bring in the necessary control and enhance government tax collections.
Posted from my blog with SteemPress : https://www.cryptonewtech.com/2020/06/22/why-emerging-economies-need-to-invest-in-legalize-and-regulate-blockchain-and-major-cryptocurrencies/