The US Government is planning to regulate Cryptocurrencies and other virtual money. There is no reason for this except they are concerned about the potential abuse of such currencies and the way they can be used by criminals to their advantage.
It has been proven that there is a high degree of potential fraud in the real world and the potential for abuse is even greater when a person is using one of these virtual currency exchanges. They are not regulated in any way and their security measures cannot measure up to any real world system.
Government Set to Regulate Cryptocurrencies
The government will probably start regulating these currencies in the same way that they do regular currencies. This means that people can only deposit money in an account if they can prove to the lender that they have a high credit score. And then they can use that money to transact in real money once they reach the agreed upon limit.
People who run large amounts of virtual cash have been known to commit some fraud, but it is impossible for the government to know what they are doing and how they are doing it. This is why they want to regulate the use of these currencies and force people to hold them within the banking system.
This will make it very difficult for the government to monitor what happens in the market or at the central bank. Even if they were able to do this they would be unable to determine what a person was doing or where they were spending their money.
The problem with all of this is that there is no real threat to the economy or the financial system from a lack of regulation. The only real danger is that criminals will be able to take advantage of the growing popularity of these currencies by using them to their advantage.
Criminals have been known to use the anonymity of the Internet to conduct all sorts of scams. They have done so many times before and it is only going to become more difficult to stop criminals from conducting their schemes when all forms of regulation are banned.
When they do try to regulate these markets, they will have to ban all forms of investment within the accounts of all institutions as well as ban all transactions between users of those accounts and the central bank. They cannot keep track of what people are doing with their money and they may find themselves at the mercy of a few criminals.
So why would the government want to ban all transactions in these virtual forms of money and not only that, they may even be able to ban the central bank? Because they do not want anyone to be able to control the flow of these currencies or because they do not trust the central bank itself.
Central banks all over the world have made mistakes in the past, they might have mis-sold certain products or given out bad advice and the governments of those countries ended up having to pay the consequences. It is not a good thing to end up in such a predicament.
The reason that central banks all over the world have fallen into trouble is because they have a tendency to make mistakes. If they did not make mistakes, they would not need to regulate these markets as they are not as capable of making the right decisions as humans.
A central bank is supposed to be the banker of the country and if they made a mistake, it will inevitably be the price of the currency rises. And since it cannot be controlled, the currency is going to go up.
Governments all over the world will soon realize that they cannot afford to risk their currency by allowing this to happen, so they are going to step in and try to regulate them. Only time will tell if this will work but you can be sure that we will see a rise in central bank failures in the near future.