Ever since Bitcoin and cryptocurrency rose to prominence in the public’s collective consciousness in 2017, the debate over if and how the cryptocurrency space should be regulated has remained a major source of controversy.
Since the pandemic began, every few months one nation or another around the world would ban or otherwise limit cryptocurrency ownership or transactions.
Until relatively recently this push was largely confined to the developing world, with nations such as India and Turkey leading the way.
Then, in February, the winds of Western government regulation and intervention in the cryptocurrency world began to rapidly shift.
In an address to a roundtable event, US Treasury Secretary Janet Yellen spoke of the “explosion of risk” that stemmed from criminals and other nefarious individuals using digital technologies.
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Yellen went on to single out cryptocurrency as a specific source of concern for the United States governments. Stating that while cryptocurrencies “held promise”, they were too often used for criminal purposes, including “fraud, money laundering and terrorist financing”.
While crypto has often been associated with these types of actions by its critics, Yellen’s comments were widely seen as a significant turning point in the attitude of the US government toward cryptocurrencies.
In the months that have followed speculation has continued to mount that a major push to regulate the crypto space may not be far away. This could bring cryptocurrency ownership and transactions into the purview of government, law enforcement and taxation authorities.
Some within the crypto space welcome increased government oversight and regulation, believing that it could provide an additional layer of legitimacy and security, to a store of value and mode of transaction still seen by many as a ‘Wild West’ of sorts.
Colonial cyberattack
While crypto was already increasingly in the crosshairs of government authorities and law enforcement around the world, several events in the past few weeks have lit a fire under efforts to regulate crypto.
On the May 9, the Colonial gasoline, diesel and aviation fuel pipeline in the United States was subjected to a major cyberattack by a Russian hacking group calling themselves Darkside.
The Colonial pipeline runs overland from Lindon, New Jersey in the North Eastern US, all the way to Houston, Texas on the Gulf coast and helps to supply the fuel needs of tens of millions of Americans.
Darkside demanded $5 million in cryptocurrency in order to return over 100 gigabytes of Colonial’s data.
As a result of the cyberattack, the pipeline was out of action for days, resulting in around 12,000 petrol stations across large swathes of the United States being impacted.
In some cities fuel shortages continued well into the following weekend, with more than 80 per cent of gas stations in some locales reporting that they were without fuel.
While the largest takeaway from Darkside’s cyberattack is the vulnerability of US infrastructure to new types of warfare and crime, it has also added further fuel to the fire for greater levels of government regulation and transparency.
Just days later there was another cyberattack, this time on the Irish health system’s IT infrastructure. As a result, the system had to be shut down and health services across Ireland were detrimentally impacted.
The disruption to their systems continued for three days, until the system was again targeted in a second cyberattack.
As these ransomware attacks become more frequent and more brazen, the cryptocurrency based ransom method will likely drive a push for far greater government regulation of crypto transactions.
Elon Musk Giveth, Elon Musk Taketh Away
In recent months, Tesla founder and billionaire cult figure Elon Musk has made all sorts of headlines in the cryptocurrency world. Back in February, when Tesla announced that it would be accepting Bitcoin as a form of payment for their vehicles, the price of Bitcoin rocketed higher on the news.
But in recent weeks the crypto community has found out the hard way that what Elon Musk can give with his support, can also be taken away almost as quickly.
Everything suddenly drastically changed when Musk announced, out of the blue, that Tesla would no longer be accepting Bitcoin as a payment method for their vehicles.
On the day of the announcement, Bitcoin fell by as much 15.5 per cent (over $9000 USD) and arguably began the rout in crypto valuations that has prices drop to their lowest levels in over three months.
China’s latest crytpo ban
In yet another blow to crypto this week, the Chinese government announced that it was banning financial institutions and payment companies from providing services to cryptocurrency transactions.
“Recently, crypto currency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order,” Chinese regulators said in the statement.
Their statement emphasised that crypto trading was high risk and that cryptocurrency was “not supported by real value”, adding that their prices were easily manipulated and trading was not protected under Chinese law.
This latest action by Beijing was arguably yet another contributing factor to Bitcoin’s recent price falls, with the cryptocurrency falling to below $39,000 USD per coin this week for the first time since early February.
Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator