UN Agency Advocates for a Crypto Regulation in Underdeveloped CountriesAugust 12, 2022
Some policy cases were presented by the UN’s Conference on Trade and Development. It came up with some measures that would help put an eye on the adoption of cryptocurrencies in underdeveloped countries.
Recommendations for Developing Countries
The UN agency’s policy document had a number of recommendations that could help to discourage the adoption of cryptocurrencies in underdeveloped countries. The UNCTD’s brief released on the 10th of August stated that an unregulated mass adoption of cryptocurrencies portends danger to developing nations.
The document, however, acknowledged the role of cryptocurrencies in speeding up remittances. It also acknowledged it as a hedge fund in the event of inflation.
The brief has it that the agency’s primary concern is with regard to economic stability, monetary system security, and mobilizing resources in those countries considered to be developing. UNCTD reaffirmed the position of the International Monetary Fund as it relates to the risks adopting crypto could cause.
The agency’s document mentioned that the current market situation is proof that crypto might endanger the financial balance of underdeveloped countries. It said that if cryptocurrencies get to be generally adopted as a means of settlement and it replaces fiat currencies, it might be the means of countries losing their monetary sovereignty.
The UNCTD recommended that there has to be a comprehensive cryptocurrency policy in underdeveloped countries. It said it would be a means of protecting consumers in those countries. The agency equally recommended that cryptocurrency advertisements should be restricted.
The Argument for CBCDs
Another issue brought up by the agency was about digital payment platforms and their development. It said the absence of such platforms would result in an outflow of capital from the actual economy and move into the cryptocurrency sector. That development, again, will undermine the economic stability of countries, the document claimed.
The agency, thus, recommended that central banks develop a national Central Bank Digital Currency. However, that would depend largely on the country’s needs and capabilities. It is said to be a ready and fast retailing settlement system.
The UNCTD argued on a final note that the wide adoption of cryptocurrencies would affect the mobilization of resources in those countries. The reason is that it is easier to evade taxes with cryptocurrencies and their transactions.
As much as crypto facilitates settlements and remittances, it could also aid tax evasion through illegal inflows. It is like being in a tax haven where owners are not easily known.