I have heard some stories about making bitcoin transactions illegal. It's all been a humor and I don't think any government have officially made bitcoin transactions illegal. Why is that?
Many governments are trying to regulate bitcoin, control exchanges and force people to be authorized. But I am sure government wish bitcoin was not created and there was no trouble of regulating bitcoin. They prefer their fiat to any other currency.
Why no government have made bitcoin transactions illegal?
I think they want to avoid creating an underground market.They don't want bitcoin to be traded like Alcohol and drugs. They have to accept bitcoin as they cannot stop a decentralized network and now they can only try to regulate it. Do you agree with me? Is there any other things have caused governments to not make bitcoin illegal?
There are two reasons behind why governments have not made Bitcoin transactions illegal until yet:
1. It isn't that easy to Completely stop transactions:We all know weed is illegal but how far has government been able to stop it's circulation in even the top tier cities of States. Bitcoin is pretty similar too. Declaring bitcoin transaction illegal would actually have no impact because it is already impossible to trace them as of now. Recently there might have been a bit uprise in such tracing due to KYC of exchanges but still core transactions of btc over a private key wallet are absolutely untraceable.
2. Political Reasons: Let's face it biggest money launders in our world are the political leaders and political parties who regularly receive millions in form of undisclosed donation and bribery. This money is definitely fed into the crypto system and comes out clean after the process. This is another reason why government is a bit lethargic at banning crypto as their own business could stop.