What Is Geo-Blocking & How Did Canada Accelerate Crypto Censorship Concerns?
Geo-blocking is a digital technology that restricts access to websites, streaming services, or other digital products based on a user’s jurisdiction or geographic location. However, it is not an absolute solution, as many users in restricted areas often turn to a VPN service to bypass such measures.
Ever since Canada recently began freezing bank accounts, financial censorship has been on the rise. I know geo-blocking is by no means something new, but it is definitely experiencing a surge, especially among large crypto entities. As mentioned recently, Bitcoin was designed to provide payment options independent of government-issued currency or third-party platforms such as banks and exchanges.
Legal regulation is an understandable move for governments and the SEC to pursue, but censorship is another story altogether. As I mentioned in my recent post, PancakeSwap will begin geo-blocking 10 different jurisdictions, including Iran. This is unfortunate for the citizens of these countries. This is also the case for the citizens of Russia and Ukraine. They are victims and held captive by the decisions of their respective governments.
This was the motivation behind Satoshi’s invention. Bitcoin was designed to be free of political and banking influence. It was designed to be permissionless and to end financial exclusion. No system or design is perfect, it seems, and we are about to experience how resilient Bitcoin really is in the face of adversity and stringent government rulings.
Why Mounting Regulatory Pressure Is Shaping The Future Of Crypto
More and more exchanges are being forced to impose account restrictions at the direction of governments. There is definitely a tightening taking place that is simultaneously excluding many from financial services. So, what happens if your “amazing” homeland does something tomorrow to upset the apple cart? You could also face exclusion from certain services.
This is the sudden reality that many ignore, simply because it has not yet affected them. I have seen some exchanges stating that they won’t simply blanket-ban users from certain regions. We will have to wait and see how this statement ages, as centralized exchanges have been forced to adjust their operational criteria significantly in recent months.
The Hidden Impact Of China Doubling Down On Digital Assets
For instance, China takes its ban on cryptocurrencies another step further and forbids citizens from even trading in cryptocurrencies. If trading is your profession, you would be jobless, without income or financial access, overnight. These are very real and extreme circumstances that could affect many in the blink of an eye. However, history has shown that government overreach ultimately forces activity underground.
Financial Censorship Promoting Real Estate
This is where serious cryptoneurs are being drawn to crypto-friendly locations. Before things go south, they are choosing to position themselves in the most friendly jurisdictions. This subsequently becomes a serious marketing campaign for property in El Salvador, Portugal, and other countries. Trying to stay ahead of the game and maintaining financial access is becoming a much-needed necessity in this ever-changing world.
Many will have no choice but to relocate, and where will they go? Obviously, they will choose the crypto havens, where they can transact and operate freely. This is already happening on a larger scale than many may realize. This movement is explored in an article addressing the reshaping of global stratification. Regulation is likely to play a crucial role in how fast this shift occurs. After all, people will go where they are treated best, provided the infrastructure is sufficient.
Crypto Is Entering A New Phase: The Rules Are Changing Fast
It’s not so much a case of remaining compliant as of reckless countries undermining your compliance through their actions. Anyone who is blocked from a financial service due to geo-blocking is not blocked for anything they have done, but rather for what their country has done. Governments are put in place to raise their people up and not exclude them from basic services.
Geo-blocking is evidence of a failed government or regime, and those who can leave will do so. I understand that in certain instances, governments will seek to block specific addresses associated with exchanges and other services. However, geo-blocking is a little too broad a measure, in my opinion. The fact is that many governments are initially taking a tough stance.
This is primarily due to fear, as most politicians and policymakers don’t understand the underlying technology or the loopholes. For them, it’s safer to simply put their foot down. However, as certain jurisdictions implement successful and reasonable regulatory measures, one can expect those jurisdictions with extreme policies to rethink their stance.
Why Using VPN Services To Bypass Geo-Blocking Is Unwise
The use of VPN services for privacy is perhaps more understandable than many other uses, such as bypassing geo-blocked services. Choosing this approach can have legal implications and often cause users to violate service agreements. This could result in the loss of assets and other implications. The best solution is to regain private ownership.
This will, of course, limit one’s ability to transact and operate in certain DeFi services or staking opportunities. However, it is the safer option. As the industry expands, users can also explore alternative opportunities that let them transact freely without worrying about violations.
Not Your Keys, Not Your Crypto
Crypto OGs understand the concept of crypto ownership, as Mt. Gox is still fresh in many minds. The crypto exchange collapsed in 2014 and was the primary platform for many market participants. Furthermore, more recent casualties such as FTX, BlockFi, and Celsius serve as a reminder for crypto investors to secure personal custody of their assets.
It is important to note that whenever you use an exchange, lending service, or other staking platform, you surrender your private keys, ultimately resulting in a loss of control and true ownership. The third-party platform now controls the private keys and, in essence, has ownership rights. This is why self-custody is so important.
Why Self-Custody Is Becoming Increasingly Important
Geo-blocking primarily affects exchanges, even decentralized exchanges, and other third-party platforms such as lending platforms. However, self-custody remains a safer alternative, making it increasingly important for crypto owners to consider independent storage. Digital asset owners should opt for a hardware wallet such as Ledger or Keystone.
Independent custody, specifically cold storage, is the safest way to store assets. Holding coins and tokens on an exchange or other service that later implements geo-blocking could have unintended consequences for regaining custody of one’s assets. Hardware wallets are likely to become the new safety standard as restrictive measures continue to rise.
Final Thoughts
Regulation is tightening and is extending into the decentralized space, affecting DEXs and other Web3 protocols. This is unfortunate, but also expected. A world without regulation or limitations is a bit of a fantasy. However, we can all agree that regulation can move in two directions:
- Proactive and understandable
- Destructive and unreasonable
Certain countries or jurisdictions are likely to be more crypto-friendly. Depending on your involvement in the crypto industry, a relocation might eventually be required. However, for most, self-custody is the wisest response to regulatory concerns and a way to explore alternative avenues that offer viability and ease of use.
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