I was saying that if the US government were to ban the exchange of any asset considered to be a store of value into US dollars, it would not matter if you could still barter with it, the value of the asset would drop substantially.
These appears to be temporary dips in the crypto space. China and Russia have tried severe restrictions for instance. Sure the US could try regulating it out of existence, but how has that worked out for online piracy? Crypto's not going anywhere unless the internet disappears. Government can attempt to stamp it out and waste billions in the process or find ways of embracing the tech.
The only legal reason to invest in crypto currencies is if you believe that the local currency and alternative fiat currencies will significantly lose value. That won't be a good situation for the average American who starts seeing rapid inflation in the goods and services that they use. People fleeing the US dollar to other stores of value would only make the situation worse (just as people tried to escape to gold during the 1930s). So at that point, it becomes a political issue. Both political parties do not want to see the US dollar lose reserve currency status. If anything challenges it, they will unite to block the challenge and will have the support of the majority of Americans who will not hold any cryptocurrencies. Online piracy is a bit different. In that case, the product stolen is the end product and the government loses out on some tax revenue. Also, a lot of people who downloaded stuff on Napster would not have purchased the CD had Napster not existed. So it's unclear what total effect piracy had. But if the US came along and said you can hold Bitcoin, but cannot exchange it for dollars, stocks, bonds,PMs, etc...the value of that bitcoin becomes worthless to the holder. I think India did something like this a year or two ago...something about banning physical cash I think... If China really wanted to ban it, they could. I suspect they are just waiting for the right moment. I would not put it past them to establish a big short position before doing so.
I agree that govts can unilaterally ban crypto and shut down fiat rails. However one thing that I don't think anyone in the banning crypto camp can answer is how would that stop cryptos exactly. There is already cross chain functionality, I don't need to transact thru a centralized exchange to convert BTC for example to actual USD. So long as the protocols exist to wrap any crypto asset exists, any crypto asset can be fungible and/or collaterized into virtual USD if the blockchain accepts the transaction. And yes completely digitized USD is coming, it is much more controllable than cash. The only complete solution to kill crypto outright is to kill the Internet, and that's not happening.
Agree that digital USD is coming as the direction in which we are heading, eventually the dollar will be worth less than the paper that it is printed on. Some common US coins are already worth more than their nominal value and that has been true for a long time. Brokers and banks have to comply with a lot of regulations. A few years back the US government cracked down on Swiss banks over concerns that US citizens were holding money overseas and not paying taxes on capital gains and interest. They basically told the banks that you either reveal all holdings for US citizens or you will no longer be able to do business in the US. https://www.usatoday.com/story/money/2016/01/27/us-slaps-13b-penalties-swiss-banks/79399262/ And it's still going on today: https://www.forbes.com/sites/jasonb...orted-offshore-bank-accounts/?sh=6b5049b64a99 https://news.bloombergtax.com/daily...kdown-on-swiss-banks-generating-leads-for-irs As Uncle Sam goes further into debt, the IRS will only become more aggressive. So no, it's not simply a matter of, "Oh, I'll just store all my wealth in Bitcoin and then when I want to buy something, my broker will convert it into USD so I can make the purchase". That's a taxable event and the IRS will know about it. Only solution around that would be to leave the country and go somewhere where there is no capital gains tax (at least on cryptos) or it's not tracked. And then to take this a step further for an outright ban, it would be implemented along the same lines. They would ban brokers from exchanging bitcoin into US dollars although they could allow the brokers to hold bitcoin...just not exchange it into US dollars or another product that could be sold or liquidated into USD...would have the same effect.
We are not talking about the same thing. It's related but not the same thing. What I am saying is there is no need for a broker or even the underlying blockchain to have to accept the native asset. As only as another party is willing to accept the wrapped asset in digital USD by exchanging digital USD, any parties can transact in any asset on the chain. The wrapping protocols already exist. There is zero need for a broker. There is zero need to convert to USD.