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What if congress bans Bitcoin?

by Syed Shoeb
, What if congress bans Bitcoin?

Donald Trump’s tweet on Bitcoin raised a stir on crypto twitter. Days after the tweet Facebook started hearings with US Senate on Libra and the Congress theoretically went after Bitcoin and cryptocurrencies. Some members of the U.S. congress have already drafted a “Keep Big Tech Out of Finance” bill, which is intended to prevent the creation of Facebook’s new cryptocurrency. The news that there may be a complete ban on Bitcoin is on top of the table and under speculation in the media. Meanwhile economist and trader Alex Kruger mentioned that the United States Constitution protects Bitcoin code as it is a form of free speech which is protected by the First Amendment. As a result, making Bitcoin illegal is equal to banning free speech and therefore unconstitutional.

However, regulators have all the power to “protect” investors from dealing in bitcoin marketplaces by targeting and isolating fiat onramps for retail and institutional investors. It would serve to remove most liquidity out of the local bitcoin markets. If Congress bans bitcoin, fiat-to-crypto exchanges will be forbidden from dealing in fiat currencies and most U.S banks supporting them would withdraw it. And this has left the world wondering whether this is how it ends.

Ban or no ban?

The most important reason that leads us to optimism is Facebook’s Libra and the support that it has received from its 20 investors. Once Libra is out and running, most tech companies and social media giants will most likely support it and it would be challenging for Congress to label every digital currency as a threat to USD or a ponzi scheme.

Given Trump’s tweet did not derail investors from pushing prices upwards, crypto twitter still looks like a positive place and the sentiment suggests buying.

However, in the event of a ban on Bitcoin… Investors, traders and hodlers will have to exit or move their assets. Exiting is profitable when the exit is made at the right time and the anonymity that Bitcoin and cryptocurrencies offer ensures that traders have room to delay their exit based on their risk appetite, amount invested and profit target. Beginners and new traders are bound to sell in a frenzy and pull prices down. More seasoned traders and investors, though concerned about the future of cryptocurrency in the US are not worried despite the ban on trading for US citizens on Binance and Bittrex. However, in the event of a ban, low liquidity and trade volumes could pose a challenge to traders waiting for an exit in USD.

Circumventing the Ban

While there are traders preparing for the worst situation, miners and adept traders have started to think about exit strategies and moving their assets strategically outside US jurisdiction. There are whales moving their assets between wallets of top exchanges and traders liquidating funds every other day. Cryptocurrencies are a global phenomenon and this fact will ensure that the value of a trader’s portfolio will never go below a certain limit. There is always an option to sell cryptocurrencies on a P2P platform anonymously and exit with USD.

Moreover, before an official ban, Congress may announce a grace period of 3-6 months for traders and hodlers to dispose off and cash out of their assets. And the whole process may take longer than anticipated. We highly doubt this will happen though.

Seasoned traders are of the opinion that even in the most difficult situation there is a way out. P2P platforms will continue to remain active, outside the jurisdiction of the US and there will be several opportunities to sell crypto and collect USD through overseas transactions.

For now, anonymity will continue to protect investors and traders’ interests while we keep an eye on Congress’ moves on Bitcoin.

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