Impact of Cryptocurrency Adoption on Government Report
The way the world exchanges value is changing. We are witnessing a rapidly growing phenomenon in the world of cryptocurrencies. Consider the fact that cryptocurrencies in just one decade have grown from a novel concept to hundreds of billions of dollars in market capitalization. Another way to measure this amazing trend is to consider the total market capitalization of cryptocurrency has reached U$1 trillion1. Cryptocurrency is trending toward total market capitalization of the world’s largest technology companies (Alphabet U$1.2 trillion, Microsoft U$1.7 trillion2). If this trend continues, there is no doubt that the future of money, law, and governance will change forever.
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 the electronic forms of payment suffice? Will cryptocurrency compliment the payment systems, compete with them, or even replace them? Will the adoption of cryptocurrency have wide-sweeping impacts on governments?
This report examines the adoption of cryptocurrency and determines the impact cryptocurrency may have on governments around the world. The study is also intended to provide public and private sector leaders with the information needed to understand cryptocurrency trends and recommend potential courses of action.
This executive summary sets the stage for the comprehensive report in which the Government Blockchain Association (GBA) Tax Working Group has studied and reported on how governments can adapt to the changing landscape of cryptocurrencies. The full report covers the following key areas:
- Government implementations – such as privacy/automation of transactions, laws allowing innovation, and management of digital IDs.
- Regulation – such as regulating blockchain-based charities and lottery systems.
- Financial inclusion – how cryptocurrencies and blockchain innovation can include more citizens in new financial systems.
- Predictions – attempts to forecast innovations that can potentially improve the lives of citizens and enable more prosperity in future economies.
- Tax policy – discusses proposed taxing structures that allow for widespread use of cryptocurrencies, while limiting government hindrance in using these currencies.
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