With the growing acceptance of Bitcoin, many investors may be asking: “Can Bitcoin be outlawed?” While that seems like a scary future possibility, it’s safe to say that there are many complications that would prevent that from happening.
Put simply and briefly: Bitcoin could be outlawed, but it’s unlikely.
Want the whole story on why? Read on!
Can the U.S. make Bitcoin illegal?
It can, and according to billionaire investor Ray Dalio, it’s “a good probability.” After all, gold was once outlawed in the United States by Pres. Franklin D. Roosevelt in 1933 via executive order 6102. The order was in response to a run on gold and required all Americans to surrender supplies of gold, besides jewelry, to the Federal Reserve in exchange for paper money at $20.67 per ounce of gold. Through this measure, the Federal Reserve was able to replenish its gold supply and back U.S. paper money. This was all in service of fueling an economy crippled by the Great Depression.
In Dalio’s opinion, if a government can outlaw gold, it might also outlaw cryptocurrency.
Have any countries outlawed Bitcoin?
Some countries have indeed outlawed Bitcoin for varying reasons. Algeria opposes digital currency because it isn’t a physical commodity. Morocco asserts that “transactions via virtual currencies constitute an infringement of the exchange regulations,” which basically means they don’t view Bitcoin as a legitimate currency. And yet as of March 2021 and despite the risk of government fines, Bitcoin trading is at an all-time high in Morocco.
An even larger threat to Bitcoin is India’s debate on banning cryptocurrency. India is a major world economy, and they plan to propose an anti-cryptocurrency bill in 2021. That said, they’ve discussed this move for years and haven’t yet pulled the trigger…
Of note: Some countries haven’t banned cryptocurrency outright but have banned certain aspects of it. For example, China has banned mining and trading cryptocurrency but not possessing it.
So Bitcoin can be outlawed, but will it be outlawed in the U.S.?
While Dalio foresees a time when cryptocurrency could be outlawed, we have our doubts. Yes, gold was outlawed, briefly and for a very specific reason: to reboot the U.S. economy. Cryptocurrency isn’t tied to a government, which is part of its appeal, so it’s difficult to envision a similar situation for Bitcoin.
And plenty of experts believe it’s unlikely the U.S. will outlaw Bitcoin, such as financial journalist James Ledbetter. “I don’t think even a concerted effort among different countries and different central banks could actually shut down Bitcoin. I don’t think that’s technologically possible.”
Gemini cryptocurrency exchange CEO and co-founder Tyler Winklevoss declares outlawing Bitcoin was possible in 2013, but that ship has since sailed. “I think that the U.S. will never outlaw Bitcoin. There’s too much precedent that’s been set in the courts. The Coinflip order, which was a CFTC [Commodity Futures Trading Commission] enforcement action which was upheld in the courts, considered Bitcoin a commodity like gold.”
So, here’s our Magic-8-Ball-style verdict on the U.S. banning Bitcoin: Don’t count on it.