Kevin Helms
A student of Austrian economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open source systems, network effects and the intersection of finance and cryptography.
UN agency urges authorities to curb cryptocurrency expansion in developing countries – Regulation Bitcoin News
A UN trade body has recommended a set of policy actions to “curb the expansion of cryptocurrencies in developing countries”. The intergovernmental group stressed that if cryptocurrencies become a widespread means of payment, it could endanger the monetary sovereignty of countries.
The UN Trade Body’s recommendations for crypto policy
The United Nations Conference on Trade and Development (UNCTAD) urged governments in developing countries around the world to take measures to prevent the widespread use of cryptocurrency last week.
UNCTAD is a permanent intergovernmental body established by the UN General Assembly in 1964. It is part of the UN Secretariat. The group reports to the UN General Assembly and the Economic and Social Council. UNCTAD has 195 member countries and 204 projects in 70 countries, the website shows.
“Global use of cryptocurrencies has increased exponentially during the Covid-19 pandemic, including in developing countries,” the group noted. “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.”
The intergovernmental body detailed:
If cryptocurrencies become a widespread means of payment and even replace domestic currencies unofficially (a process called cryptoization), this could jeopardize the monetary sovereignty of countries.
“While cryptocurrencies can facilitate transfers, they can also enable tax evasion and avoidance through illicit flows, just like to a tax haven where ownership is not easily identifiable,” UNCTAD described. “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 trade body explained that it has issued three related guidelines. One, published on June 13, outlines the high costs of leaving cryptocurrencies unregulated. Another, published on June 22, discusses public payment systems in response to financial stability and security risks of cryptocurrencies. The third brief, published on August 10, focuses on how cryptocurrencies can undermine domestic resource mobilization in developing countries.
One country that has adopted bitcoin as legal tender alongside the US dollar despite repeated warnings from the International Monetary Fund (IMF) is El Salvador. The country has bought 2,381 bitcoins for the treasury since BTC became legal tender last September.
UNCTAD has recommended a set of policy actions, saying it “urges governments to take the following measures to curb the expansion of cryptocurrencies in developing countries.”
The first recommendation is to “ensure comprehensive financial regulation of cryptocurrencies by regulating crypto exchanges, digital wallets and decentralized finance, and ban regulated financial institutions from holding cryptocurrencies (including stablecoins) or offering related products to customers.”
Second, the government should “Restrict advertisements related to cryptocurrency”, “Weld a safe, reliable and affordable public payment system adapted to the digital age” and “Agree and implement global tax coordination regarding tax treatment, regulation and information sharing of cryptocurrency. ” The latest recommendation calls on the authorities to:
Redesign capital controls to take into account the decentralized, borderless and pseudonymous characteristics of cryptocurrencies.
What do you think about the UN trade body urging the authorities of developing countries to curb the widespread use of cryptocurrency? Let us know in the comments section below.
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