17.03.202115:57 Forex Analysis & Reviews: How cryptocurrencies can prevent countries from recovering their economies

The trend of recent months shows that groups of people who are ready for even greater digitalization are gradually increasing among the world community. Almost everyone who supports these sentiments is convinced of the need to introduce new means of carrying out payment transactions. This information appeared in the reports of large payment companies, such as Visa, as part of the development of a strategy for the future.

Right now, in 2021, cryptocurrencies are a very attractive asset that has enormous potential and a range of opportunities. This became especially noticeable after the adaptation of world economies to the coronavirus crisis. Many financial companies understand the versatility of crypto assets and invest in the research and development of various software. And representatives of the payment giant Visa openly stated that they see the prospect of making crypto assets the main means of payment of the future.

Despite the bright prospects and belief in a bright future for cryptocurrencies, there is a downside that is beginning to emerge right now. Digital assets are a very young instrument that is positioned as a breath of fresh air in the financial markets. And a great merit of this reputation is the lack of detailed legislative regulation. Now cryptocurrencies are a financial instrument that is in free float and does not have strict legal restrictions.

However, the completely free flight of digital assets did not last long, and the first important call in this was the news about the complete ban of cryptocurrencies in India. Because of this, rumors have spread that the United States may also introduce certain bans on operations with cryptocurrencies. This is due to a very important point in the income of any state and the JPMorgan report. Analysts of the financial giant advise buying bitcoin worth 1% of the investment portfolio for protection against inflationary losses. This led to the fact that many market participants began to transfer their capital to cryptocurrencies. The new scheme allowed not only to preserve their funds and increase them but also to avoid paying taxes in a completely legal way. Such a development of events cannot but worry the leaders of states.

Given the coronavirus crisis and the continued recovery of global economies, governments will be forced to raise taxes. However, at this stage, the transfer of their capital to cryptocurrencies allows companies to avoid huge taxes and save profits. This loophole could seriously hurt government revenue in terms of taxes. Moreover, the increased interest in cryptocurrencies may provoke a decrease in demand for Treasury bonds and stocks, which are also an important tool for filling the budget.

All this may provoke the creation of a legal mechanism that will take a more strict approach to the issue of transactions with cryptocurrencies, withdrawal of funds, and taxation. This will largely deprive digital assets of the maneuverability and versatility that they currently possess.

The legislative restriction of activities related to cryptocurrencies could have occurred much later, but the coronavirus crisis made its own adjustments. Crypto assets have become a reliable chest for the capital of large companies and retail traders, and have also shown resilience during downturns in global economic indicators. However, now digital assets can play a cruel joke with states that will try to restore their economies as quickly as possible. The cryptocurrency market is being selected for those indicators of involvement in global financial processes when it needs additional legal solutions.