The increasing popularity of cryptocurrency is something that is bringing a large amount of attention to different governments across the world. Many federal governments and central banks have been in the process of experimenting with how they can use cryptocurrency or the underlying blockchain technology for their benefit. The central bank of China announced in January that they had completed a successful trial run of transacting digital currency amongst different banks, but this is in contrast to the shutting down of all cryptocurrency trading platforms within the country.
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During the month of September, Japan, Sweden and Estonia all announced that they were working on similar digital currency projects, but that doesn’t mean other governments are not attempting to catch up. The UK, Uruguay and Kazakhstan have been working on similar projects as well. Willian Dudley, president and CEO of the Federal Reserve Bank of New York stated that they are exploring how they can offer a digital currency, but it is still too early to figure out whether or not this would happen. The question still remains as to whether or not we will see a government backed cryptocurrency soon or not.
Since the technology is relatively knew and only recently adopted on a mainstream level, governments have just begun to work on this project if at all. Jacob Eliosoff, investment manager of Trevi Digital Assets Fund stated that “to me the idea of cryptocurrency is free of control from any person and institution. There’s nothing cryptocurrency about these government backed projects.” He also stated that “you have one institution that controls it, and they can change the rules when they want; they can prevent certain transactions from happening if they don’t trust the party involved. It’s not that that’s bad, but that’s not a cryptocurrency. That’s just a currency that happens to run on a computer.”