Crypto and Government
People I think people worry too much about government and crypto, let’s game out their options.
Option #1 - Ban Crypto: This only places a premium on creating anonymous and untraceable blockchains which would just make the governments job even harder and impossible to tax. This would also result in an essential sanction on 3rd world countries who’ve been able to find greater economic stability because of cryptos ability to facilitate remittance (search for bitpesa).
Option #2 - Tax Crypto: Same result, just encourages the creating of more untraceable and anonymous crypto. Governments know how to track bitcoin, their best bet is to embrace the devil they know.
Option #3 - Regulate intermediaries: Regulating exchanges and dealers is an effective way of slowing things down, but like like regulating crypto directly incentivized quicker creation and adoption of decentralized exchanges and platforms (Waves, Bitshares, NXT, Komodo, Lamden)
Bottom line: Governments best bet is to just embrace bitcoin and litecoin since they will be more transparent than future cryptos and merely request people report the same earnings they otherwise would had they operated in dollars (treat crypto as a currency), maybe even accept them for payment of taxes like Arizona.
This would make Bitcoin and Litecoin dominate and undercut other cryptos that undermine government at a greater level (which I’m fine with those cryptos doing).
Although, knowing government they will go with the doors 1,2 and 3 and suffer for it as they render themselves powerless.
I think I read that the federal government was mulling over the idea of receiving tax payments in bitcoin. I am pretty sure once that happens, taxation of all crypto-currencies won't be far behind. On the flip side, it might make the price of bitcoin go up since now it would have a use aside from magical internet nerd money.