Post-Pandemic Government Interest in Cryptocurrencies
Since the early days of the pandemic in 2020, many leading currencies have advanced enormously.
The global pandemic added urgency to contactless business methods. Government-issued coins and notes are physical things that people may be required to handle and transfer. Governments must pay attention to new and existing processes to increase contactless transactions. Handling paper money and coins can be a source of viral spread and infection. Digital payment systems reduce hand-to-hand transfers of physical objects.
The pandemic caused many investors and companies to seek alternative investments. The pandemic created additional needs for digital assets and digital finance in the global economy. Banks are finding roles related to cryptocurrencies, such as custodians for cryptocurrency owners and investors.
Federal and state legislatures consider cryptocurrency policies, including the below-described bills.
- Cryptocurrency Act of 2020 proposed a broad federal regulatory and public information framework for cryptocurrency.
- Inclusive Value Ledger Bill was introduced in the State of New York to establish digital wallets to hold digital value for low-income residents and those that lack access to banking services.
Many commercial and business sectors find benefits in blockchain technology for record-keeping and improving operational efficiency. They include the insurance industry, where blockchain has improved prompt payments.
The pandemic added new demands for fast records systems, transparent processes, and high-volume data sharing. These needs may grow as pandemic management steps increase by adding broad contact tracing, new therapeutics, and vaccines.
Governments fear the loss of control through their banking and financial systems. Decentralized ledger systems pose unusual challenges for governments, and the KYC and AML policies remain barriers to government adoption of cryptocurrency.
The pandemic will likely cause many governments to use monetary policies to stabilize their economies and stimulate economic recovery. Many governments may have more significant incentives to moderate opposition to cryptocurrencies that can increase access to financial resources and support broader economic participation.