So far, only China among major economies has pulled the plug on cryptocurrencies. The US government will eventually have to implement a broad-based ban, too, according to Kenneth Rogoff, an economics professor at Harvard University.

Cryptocurrency prices continue to drop as central banks start raising interest rates. Many investors wonder if this is the beginning of the end of the bubble that has been growing for a while. Low interest rates and quantitative easing have boosted the cryptocurrency market over the past two years. However, the Fed's new monetary policy has put the markets under pressure. The question in mind is whether Bitcoin can survive in this environment. The more interesting question is what will happen when governments finally take serious steps to regulate Bitcoin and altcoins.

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Among the major economies, only China has so far begun to do so. The Chinese Communist Party implemented the digital yuan launched by the central bank, using energy and high risks as an excuse. But this is something unusual. While CBDCs are likely to include privacy features for small transactions, larger transactions will certainly require individuals to reveal their identities. In contrast, one of the biggest features of cryptocurrencies that attracts people is the opportunities they offer to circumvent governments. Cryptocurrency transactions are fully traceable via the blockchain ledger, but users often create accounts under pseudonyms and therefore difficult to identify. Economists argue that regulation is not urgent, as cryptocurrencies are difficult and costly to use for transactions. However, developing countries where cryptocurrencies have become an important tool to evade taxes, regulations and capital controls have been alarmed. The West, on the other hand, has become aware of this danger recently.

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Cryptocurrencies have become a serious problem both in developed western countries and in Asia and Africa. According to experts, cryptocurrencies have started to threaten the legal order and traditional financial system due to their privacy and decentralized nature. For example, cryptocurrencies are used by the Venezuelan military in drug trafficking operations and by criminals and politicians trying to circumvent US financial sanctions. Given that the US is currently imposing financial sanctions on more than a dozen countries, hundreds of organizations and thousands of individuals, cryptocurrencies are a natural haven.

Cryptocurrencies have now become a global issue. Regulators became more concerned about investor protection and financial stability. Economic theory has long shown that the value of any currency ultimately depends on its potential fundamental uses. The biggest investors in cryptocurrencies may be in developed countries, but the biggest chaos and crises so far have been mainly in emerging markets and emerging economies. Western countries have likely seen problems with cryptocurrencies finally knocking on their doors.

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According to Kenneth Rogoff, professor of economics at Harvard University, the US government will eventually have to impose a broad-based ban. The ban will certainly include financial institutions and businesses, and will likely include some restrictions on individuals. Such a move would reduce liquidity, leading to a sharp drop in today's cryptocurrency prices. Of course, the impact of the restrictions will depend on the number of countries enforcing them.

 As China has shown, it is relatively easy to shut down crypto exchanges that the vast majority of people use to trade cryptocurrencies. It is more difficult to prevent “on-chain” transactions as individuals are more difficult to identify. According to the professor, it is out of the question to limit all blockchain applications. For example, regulated stablecoins backed by a central bank balance sheet can still be successful, but there must be a simple legal mechanism to track a user's identity if necessary. According to the economist, stricter cryptocurrency regulation is not far off. Cryptocurrency crisis likely to come sooner or later.