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Why The Government’s Approval Could Be What Crypto Needs to Reach Mainstream Adoption
In 2021, The El Salvador president proposed accepting Bitcoin as a legal tender in the country. The bill targeted the introduction of Bitcoin as a legal currency to be used in everyday activities. Later in June, it passed the law in the Salvadoran Congress, where 62 out of 84 members voted for the bill.
The news of El Salvador using crypto trended for over one week, sparking other countries like Paraguay to follow the course. Although Paraguay’s plan is not to make Bitcoin a legal tender, they have still shown interest in the asset.
Since then, there have been many predictions as to the impact of El Salvador’s move. The primary question remains, will the Salvadorian government’s approval have any effect on crypto? Yes! The involvement of El Salvador with crypto could set up the globe to the adoption of Central bank digital currency platforms.
Furthermore, governmental support of crypto is a massive step towards sending crypto adoption mainstream. Keeping that in mind, this guide will discuss how governmental support can send crypto to the mainstream.
Ending Legal Barriers Will Accelerate Adoption
One of the significant issues curbing the mainstream adoption of crypto assets in many nations globally is the national and international regulations set for crypto assets. As things stand today, many countries globally have banned crypto and its use, citing many different issues.
Among the countries include Bolivia, Bangladesh, Iran, Nepal, Thailand, and Ecuador. Most countries do not accept any crypto-related activities, while some have banned just the use of crypto as a currency. Furthermore, other countries over the world have prohibited some crypto-related platforms like Binance exchange.
For instance, the US authorities banned The Binance global exchange on accusations of participation in illegal activities. Later Binance introduced a new platform, Binance US, which followed all the US guidelines. However, only 43 states accept the services of Binance US, excluding Hawaii, New York, Texas, Connecticut, New York, Vermont, Louisiana, and Idaho.
The legal barriers in such countries have been a significant factor discouraging the growth and adoption of crypto assets globally. However, once crypto assets are accepted on a national level in as many countries as possible, that would mean an end to the much-increasing legal barriers. Ending the legal barriers will help in sending crypto assets to deep mainstream adoption.
If countries reduced their sanctions and found a way to support crypto, then the mainstream adoption of crypto would accelerate.
Increased Knowledge and Understanding on Crypto
Today, the number of people with knowledge of the crypto world is increasing, but very few people have heard about or used crypto. However, recent statistics show that at least 100 million wallets have at one point used crypto, thus approximating that the number of crypto users is 100 million or over.
Although the number of wallets is 68 million, the number of users is way below that since many crypto investors have multiple wallets. Therefore, the estimated number of current crypto users could be 40 million or even less. Consequently, the knowledge about crypto is still lagging.
However, once the global governments adopt crypto and start using it as a daily currency, the knowledge about crypto will increase fast. Furthermore, when the government adopts crypto, they will institute ways to educate the average users on using crypto. Therefore, even the most minor investors will garner vast knowledge on crypto. Once everyone gets the education, the mainstream global adoption of crypto will accelerate fast.
Governmental Acceptance Foster Trust
Currently, because of the lacking governmental support of crypto, there is lacking trust in assets like Bitcoin and Ether. Most investors chose not to invest with the fear that crypto assets are not trustworthy. Some still view many crypto assets as scams.
Even top financial analysts and investment experts still consider crypto a bubble that can burst any time. Identifying crypto with such a definition makes even small-scale traders and the larger global population beware of investing in crypto.
However, once governments globally accept crypto assets as modes of payment, trust in crypto will increase. Investors will start noticing the investment prospects of crypto and also the possibility of using them as currencies. As the confidence grows, the mainstream adoption of crypto will be inevitable.
Governmental Supports Leads to Institutional Adoption
Lack of governmental support is also hindering big institutions, both financial and nonfinancial, from using crypto. In addition, many institutions fear associating with crypto because they fear being part of any illegalities related to crypto.
However, once the government supports or accepts crypto as legal tenders or investment securities globally, most banking institutions will get interested in crypto. If one banking institution in a country starts accepting crypto, customers will demand the same services from other banking institutions, ultimately sending crypto viral and mainstream.
Nonfinancial institutions like hospitals, schools, malls, and many others will also follow course, thus making crypto a daily usage asset, utterly achieving mainstream adoption.
Increased Utility Means Increased Adoption
Once governments accept cryptos, they will have increased utility both in local and international trades. Traders conducting import and export activities will prefer using crypto because transactions in crypto are favorable and are not bound by jurisdictions.
The use in international trades will increase utility, leading cryptos to be adopted mainstream.
Considering the recent move by the Salvadoran government, there are many speculations on the possible impact of governmental support on crypto. However, the truth is, if governments began supporting crypto, then assets like Bitcoin and Ethereum would go mainstream very fast.
Foremost, governments would end the many barriers set against crypto and make it easy for crypto platforms and assets to complete their activities. Furthermore, most governments will institute policies to train their citizens on the basics of crypto, thus increasing the level of crypto knowledge. Increased trust, institutional adoption, and utilities would also increase the chances of crypto going crypto.
In the long run, governments will start leveraging Central bank digital currency systems that will transform the financial world into an entirely digital future.