The UN says developing countries should ban bitcoin ads, regulate cryptocurrencies

by James · July 13, 2022

A recently published policy brief from the UN recommended developing countries to take action against crypto, and warns of the risks associated with leaving the industry unregulated.

In the document entitled “Gold is not all that glitters, ”First published in June, the United Nations Conference on Trade and Development (UNCTAD) stated that the disadvantages that these nations pose to cryptocurrencies far outweigh the benefits they can provide to individuals and financial institutions. And the document goes so far as to suggest that developing countries require mandatory registration of all crypto wallets and ban ads related to cryptocurrencies.

“This is not about approving or not approving [of crypto] but points out that there are social risks and costs associated with cryptocurrency, said Penelope Hawkins, an economist and senior chief financial officer at UNCTAD. Decrypt. “This is a recommendation that applies to all speculative or high-risk financial products where returns are uncertain.”

The intergovernmental organization warned that cryptocurrencies could threaten the economic stability of developing countries, enable illegal financial activity, prevent the authorities from restricting the flow of capital, and also jeopardize the monetary sovereignty of nations by unofficially replacing domestic currencies.

The card advised governments to “make the use of cryptocurrency less attractive” by imposing taxes on transactions using the technology and requiring mandatory registration of digital wallets and cryptocurrency exchanges. It also promotes the idea of banning financial institutions from holding digital assets and preventing them from offering crypto-related services to customers.

Developing nations should restrict or ban advertising from crypto companies in public places or on social media platforms, the conference also suggested, arguing that there is an “urgent need for consumer protection in countries with low levels of financial expertise” that could lead to “significant losses” , according to the policy.

Rohan Gray, a law professor at Willamette University College of Law, has worked as a consultant for the United Nations on digital currencies and said that the lack of regulation regarding cryptocurrency has a documented history of harming consumers by enabling fraud and deception.

“The ecosystem is not fully mature and mature,” he said Decrypt. “To allow [the industry] “Marketing yourself aggressively would be like having a new type of drug that has not even gone through the FDA process and is trumpeting itself as solving cancer.”

The card’s last piece of advice is for nations to develop their own payment systems that will serve as a public good, much like government-built infrastructure does, and explore the establishment of a digital central bank currency (CBDC).

CBDCs are a digitized form of fiat money issued by public money authorities. While some CBDCs work in the same way as cryptocurrencies, they are issued by governments and the value is supported by them. A few developing countries have already introduced CBDCs, such as the Bahamas, which call their version Sand Dollar.

“You do not have to worry that the money itself will stop having value with CBDCs the way you do with stack coins,” said Gray. “$ 1 issued by the government can always be redeemed for $ 1 issued by the government.”

Although he believes that CBDCs have risks associated with them in terms of monitoring and censorship, he said that the same concerns apply to stack coins and that the potential for default makes them a less favorable asset-seeking parity with fiat currencies compared.

The report cites China’s efforts to establish a CBDC as well and mentions it as one of the nine developing countries that have banned cryptocurrencies directly. That list also includes Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia.

One of the reasons that prompted UNCTAD to issue the brief is the growing use of cryptocurrencies worldwide, which it said was accelerated by the pandemic. The simplicity of sending money transfers drove people towards technology, it is said in the assignment, as well as the idea that it can help ensure household savings in times of currency weakening and rising inflation.

“There is no uniform political response,” the conference said, but called on countries to take a forward-looking approach to regulation. “Doing too little or doing something too late will lead to higher costs in the future.”

The UN has one history to use digital assets to promote various initiatives. Earlier this year, the UN unveiled an NFT art collection called Boss Beauty Role Models as part of International Women’s Day, which the organization has been celebrating since 1975.

And in 2021, the UN supported a competition called DigitalArt4Climate, where participants created NFTs designed around the theme of climate change. The winner had his artwork shown at the climate conference that took place in Scotland.

The same year, the United Nations International Child Welfare Fund (UNICEF) announced the launch of an NFT series on Ethereum to celebrate the agency’s 75 – year history and raise money for Giga initiativewhich helps with fun internet connections for schools all over the world.