The Tax Working Group of the Government Blockchain Association (GBA) has issued its first release of “The Impact of Cryptocurrency Adoption on Government.” This study, developed by an international panel of government and private sector experts, examines the adoption of cryptocurrency around the world and determines the impact it may have on governments. The study is intended to provide public and private sector leaders with the information needed to understand cryptocurrency trends and recommend potential courses of action.
While the world is navigating uncharted waters as the global pandemic introduces many challenges to national economies, governments are especially vulnerable to the changing tides that threaten established norms. The very definition of money itself is changing. As in many times of crises, there are opportunities to explore new ways of doing things that end up improving people’s lives.
“We are witnessing a rapidly growing phenomenon in the world of cryptocurrencies, as it is trending toward total market capitalization of the world’s largest technology companies. If this trend continues, there is no doubt that the future of money, governance, and the law will change forever,” says Mark Montoya, Chief Data Officer at the Government Blockchain Association.
But what will this mean for governments?
“To understand this phenomenon, we need to start asking questions about cryptocurrency. If the cryptocurrency trend persists over the next ten years, what is the impact on the global financial system? If significant transactions bypass traditional financial institutions, how will governments manage their economies and enforce their laws? Will cryptocurrency complement the payment systems, compete with them, or even replace them?” says Ksenija Cipek, Head of Tax Risk Analysis at the Ministry of Finance of Croatia.
The study discusses the impact of cryptocurrency adoption on the following areas of government: regulation, ethics, privacy, jurisdictions, economy, enforcement, and taxation.
Governments have embarked on many different initiatives ranging from Central Bank Digital Currency (CBDC) development projects to authorizing cryptocurrency custodial services for banks and drafting new cryptocurrency regulations. This study shows how and in what ways the evolution impacts government and the broader public sector, region by region, country by country.