Following last week’s attack on bitcoin and Facebook’s libra, experts have voiced their opinion on whether US President Donald Trump could realistically impose a ban on cryptocurrency.
Not a Fan of Bitcoin
On July 11, President Donald Trump published a series of tweets attacking bitcoin and digital currencies, while championing the dollar.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity....— Donald J. Trump (@realDonaldTrump) July 12, 2019
President Trump’s comments come in the midst of growing concern over Facebook’s libra, as political regulators around the world scramble to enact policies to deal with the rise of digital currencies.
Members of the crypto community have questioned the impact of the US President taking an unfavorable stance towards bitcoin. Some crypto pundits predicted the tweets would be good for the price of BTC and ultimately increase exposure to cryptoassets. However, others worry that political influence may lead to a crackdown on cryptocurrency usage.
Scenarios for Banning Crypto
Alex Kruger, economist and market analyst, published a tweet thread examining the legality and possibility of President Trump banning bitcoin.
1/ Could Trump ban Bitcoin?— Alex Krüger (@krugermacro) July 15, 2019
Thread 👇 pic.twitter.com/KeDI35GU7C
According to Kruger, It would be almost impossible for the US government to outlaw bitcoin as a technological instrument. Aside from the Herculean task of eradicating a decentralized, digital technology, bitcoin is code, which is protected under the first amendment.
However, that same protection is not extended to third-party operators, including cryptocurrency exchanges.
Kruger quoted Abra CEO and Founder BIll Barhydt, who explained in a Forbes article how the government could target fiat onramps to exchanges,
“You can’t prevent people from holding ones and zeroes on a device in their pocket. That ship has sailed. We already know that. The question is: What can they do at the edge of the network -- the onramps and offramps, the places where they exert control over the banking system, the exchanges, [and the] stablecoins.”
The US government could prevent retail investors from having access to crypto-assets through exchanges and prevent banks from allowing transfer of funds. Users would still be able to buy crypto through alternative channels, but the current ease of investing would be severely hampered.
Unlikely, But Not Impossible
President Trump could also issue an executive order banning citizens from dealing in bitcoin, similar to the one he issued against the Petro. While there is a precedent for this route, Kruger claims the order could be easily overturned by Congress,
6/ Assuming it indeed is unlawful to ban US persons from dealing in Bitcoin, an executive order could be easily over-turned by congress or courts, as the President’s authority to issue executive orders must come from Constitution or federal law. See 👇https://t.co/5NhW2r4gN0— Alex Krüger (@krugermacro) July 15, 2019
Ultimately, Kruger believes that it is unlikley the President or Congress would move to ban bitcoin, and it would be difficult to enact fool-proof policy. However, it's worth considering the political landscape as regulatory concerns mount over Facebook's libra.
Just last week, a copy of a bill reportedly drafted by the House Financial Services Committee surfaced online, under the title "Keep Big Tech Out of Finance." The bill would put an end to Facebook and other large platforms from issuing digital currencies without incurring a severe penalty.
The same could be extended to bitcoin in the event the government finds crypto-assets no longer tolerable for the general public.