Avoiding Losses due to a Crypto Ban
The cryptocurrency market has seen its share of surprises especially when regulators decide to implement a ban on activities related to cryptocurrencies. In most cases when such bans are announced; be it a ban on banks to facilitate crypto account holders or a ban on crypto exchanges to offer to retail traders with crypto derivative products, the crypto holders in that specific country are left scrambling for options.
Several countries have banned various crypto activities around the world including completely banning the use of cryptocurrencies in their country. In the UK for example, the FCA banned exchanges from offering retail traders derivatives trading services. Other countries like Algeria, Bolivia, Morocco, Nepal, Pakistan, and Vietnam have banned any activities involving cryptocurrencies.
At the moment eyes are on India and Nigeria as both countries introduce bills to ban and curtail cryptocurrency use in the countries respectively. In India, it is expected to ban the use of all private cryptocurrencies following the Cryptocurrency and Regulation of Official Digital Currency Bill 2021 that proposes to completely ban all private cryptocurrencies in the country.
In India, for example, if the bill is to be passed, it would mean that the many freelancers who accept payments in cryptocurrencies because they offer a faster and cheaper method of getting paid will have to find alternative means, which are very expensive and tax burden. Worse still there are very many people in the country that have crypto holdings that they either purchased using their hard-earned money or received as payments after working hard for it. So the question remains, what shall these people do with these crypto-assets?
In this post, we shall look at ways in which crypto asset holders can avoid losses following such crypto bans. We shall outline several options, which include:
Move the crypto assets into a self-custody wallet
Self-custody wallets like hardware wallets are normally not under any regulations and users can use them as they wish. If a Bitcoin trader for example gets a Ledger hardware wallet to store his/her Bitcoins, he/she will be the only person responsible for the BTC coins.
Examples of other popular hardware crypto wallets include SafePal, BitLox, and Trezor.
With the crypto assets in the self-custody wallets, the users can then choose to trade them for fiat currencies on Decentralized exchanges (DEXs) like Airswap and Stellar Decentralized Exchange (SDEX) that allow fiat on-ramps. The advantage of using the DEXs is that they are decentralized and thus not under any regulatory authority.
Once you get the fiat currency you can withdraw/transfer it to an online payment account like PayPal from where you can withdraw to your bank account.
Sending the crypto assets to friends or families in other countries
If you have a friend in a country where the regulations are friendlier and you feel you want to hold on to your crypto assets, you can send the assets over to their wallets and ask them to keep custody over them before you decide to sell them.
However, you have to have a lot of trust in such a person since if the person is cucked, he could end up running away with the crypto assets and there is nothing you can do in such a case.
Invest in DeFi protocols and avoid doing crypto transactions over bank
The cryptocurrency world is ever-changing, some countries that had banned cryptocurrencies have now sobered up and come up with better regulations that allow crypto activities to continue through strict rules and regulations. Therefore, you should expect that 1, 2, 3, 4, years down the line your government may soften its stand.
And the only way to remain in the custody of your crypto assets till then is investing in DeFi protocols that are decentralized and not under any regulations. That way, your crypto assets will continue earning you more revenue instead of just holding them in self-custody wallets for all that time expecting the tide to change.