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Ask CryptoVantage: Would Crypto Survive if USA, UK, and China Banned It?
As much as crypto has taken off like wildfire, the crypto community is not naive to the fact that governments do not necessarily share the enthusiasm. Such lack of enthusiasm is evident in their reactions, ranging from outright bans to central bank digital currencies (CBDCs) to compete with crypto to what would seem like total onslaughts in the name of regulatory oversight.
Who’s to know whether these governments will actually go there and ban cryptocurrencies? It’s not a farfetched possibility. For instance, the US government is now being accused of “quietly trying to ban crypto” by “ringfencing it” and “cutting its connectivity to the banking system.”
Contrary to popular belief, powerful governments banning crypto wouldn’t necessarily have to be a dramatic, apocalyptic-esque, one-fell-swoop end to the industry. It could also be a pernicious affair, where one day we wake up and the industry is reduced to a mere shell.
But what would happen to the crypto industry if powerful governments like the US, UK, or China were to implement a ban in any form? Would it survive?
Crypto's Inherent Defenses
One of the core features of crypto is decentralization. A currency like Bitcoin, for example, exists and operates in a peer-to-peer (P2P) manner. It’s also “owned by” and run by network participants, known as nodes, spread across the globe.
Unlike traditional finance establishments like banks, it’s difficult matter to target a cryptocurrency like Bitcoin because it doesn’t have an office or any specific person running the show. As such, it doesn’t have a single point of failure or a kill switch, making it hard to disrupt.
Indeed, attempting to ban the Bitcoin network itself would be a tall order. You’d need a massive and coordinated effort to hijack the majority of its nodes — which is both expensive and likely to be futile. Crypto advocates assert that this inherent resistance to censorship makes Bitcoin censorship-resistant.
If governments set out to ban Bitcoin, they would target infrastructure that supports it instead. That would include exchanges and fiat on-ramps, mining, funding activities (such as venture capital, initial coin offerings (ICOs), token sales, etc.), and pretty much everything related to crypto. Such actions would undoubtedly deliver a blow to the crypto ecosystem.
Would Crypto Survive a Ban?
In this scenario, two potential outcomes emerge: either the industry collapses entirely or thrives in underground markets within banned countries while flourishing in others. Let’s explore these possibilities more closely:
The Total Demise of The Industry
While this scenario is unlikely, it’s still worth examining because the US, the UK, and China are countries with a ton of influence and economic as well as geopolitical power, along with a passionate and strong crypto user base.
Hence, their banning of crypto would initially cause a massive disruption in the market: low liquidity, loss of investor sentiment, plummeting prices and in general, a challenging space to operate in. However, thanks to the decentralized nature of cryptocurrencies, the industry would not be wiped out.
Crypto Goes Underground
As history shows, attempting to ban items or technologies can have the opposite effect. In crypto, an illustration of this phenomenon is when China banned crypto mining. Despite this, local crypto mining would later rebound and see China again become one of the largest mining destinations, even in the face of potential consequences for miners in the repressive regime.
Another example is when Nigeria’s central bank banned Bitcoin, and citizens turned to P2P exchanges. The recurring pattern is clear: crypto consistently finds a way to survive, despite suppression efforts.
The notion of governments attempting to restrict a decentralized and borderless currency system that gives people an option out of the government-controlled fiat money would only underscore their necessity.
This is why if powerful countries like the US, the UK, and China banned crypto, it would only push the industry underground. Crypto enthusiasts would defy the ban and take to the dark web or black market. These underground networks would facilitate the peer-to-peer exchange, transfer, and storage of crypto, giving rise to a parallel crypto economy.
Within this parallel economy, we’d also likely see the increased use of privacy-enhancing services such as mixers. Crypto mixers are technologies that “mix” a user’s coins with other users’, so it’s hard to tell the transaction’s origin or owner. Mixers obfuscate crypto transactions, preserving their anonymity.
Crypto’s Global Resilience
Moreover, in the event of such a ban, crypto would still survive and flourish in other countries.
Africa, for example, has emerged as a global leader in crypto adoption, with its citizens finding relief from stringent capital controls, high remittance costs, and the devaluation of local currencies. Similarly, Venezuelan and Argentininian nationals have turned to cryptocurrencies as means to maintain financial stability amidst turbulent economic conditions.
Additionally, crypto usage is becoming rife in countries impacted by US sanctions, such as Iran, North Korea, and Venezuela. These nations have resorted to cryptocurrencies to mitigate the force of those sanctions.
The adoption of Bitcoin as a legal tender in El Salvador and the Central African Republic also proves that crypto’s potential and use cases go beyond powerful countries.
Even the International Monetary Fund (IMF) seems to be changing its tune about crypto and recently stated in a report that banning cryptocurrencies “may not be effective in the long run” as citizens have unmet digital needs around the globe.
Final Thoughts: Ultimate Survivor
Crypto would not just survive but thrive even in the face of a ban by a group of formidable nations. Crypto’s ingenious qualities of decentralization and censorship resistance enable it to withstand the capricious moves of any government.
And it’s not just the technical qualities that make it resilient; it’s also the fact that it has empowered individuals and communities everywhere, earning it devoted fans.
