The UN is urging developing countries to limit the use of crypto, citing risks to financial and social stability
An intergovernmental body of the United Nations (UN) created to promote the interest of developing countries is asking emerging markets to limit the use of crypto.
The United Nations Conference on Trade and Development (UNCTD) warns that the use of crypto in developing countries could jeopardize financial stability, domestic resource mobilization and the security of monetary systems.
“While these private digital currencies have rewarded some, and facilitate transfers, they are an unstable financial resource that can also carry social risks and costs.”
Referring to the three guidelines issued to delve into the growing popularity of digital assets and their risks, the body says that holding crypto can potentially lead to financial losses.
The UNCTD says that digital assets can also jeopardize the monetary sovereignty of countries as their use as a means of payment and as an unofficial domestic currency becomes more widespread, and says that stablecoins pose a risk to developing countries, especially those with unmet reserve currency requirements.
“Given the risk of highlighting the digital divide in developing countries, UNCTAD urges governments to maintain the issuance and distribution of cash.”
UNCTD says crypto can also enable tax evasion since owners of digital assets are not easily identifiable.
“In this way, cryptocurrencies can also dampen the effectiveness of capital controls, a key instrument for developing countries to preserve their political space and macroeconomic stability.”
The body then calls on the authorities to implement policy actions to curb the widespread use of crypto in developing countries.
These include regulating digital asset platforms, limiting crypto-related ads, rolling out digital payment systems, addressing crypto tax rules, and revising capital controls to take into account the decentralized and pseudonymous nature of digital assets.
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