Published on : 12/08/2022 – 11:30
The UN calls for stopping the rise of cryptocurrencies in developing countries and warns once morest the risk of money laundering and tax evasion, but also on the use of this type of currency which can lead to “ social risks and costs ».
According to the United Nations Conference on Trade and Development (Unctad), the volatility of digital currencies can ruin their holders in these countries.
There are two concerns. One that is more regarding using Bitcoin as a reference currency – like El Salvador or the Central African Republic – as an alternative monetary system. There, it is the fear that this strategy is dangerous for the stability of the country. And then, the other side is that the fact that these populations, who effectively, in developing countries, have fairly low confidence in their monetary and banking institutions, use alternative currencies to be able to access financing to which they do not have access in their countries, since they are precarious. So, there is the fear that they will be lured into going through platforms which, in the end, will make them debtors and put them in a difficult financial situation. »
Nathalie Janson, professor of economics at NEOMA Business School
In a first note entitled “All that glitters is not gold. Not regulating cryptocurrencies is very expensive,” UNCTAD examines the reasons for the rapid adoption of cryptocurrencies in developing countries, and believes that if they continue to grow as a form of payment, or even unofficially replace national currencies, it is the “monetary sovereignty” of countries that might be jeopardized.
Unctad focuses on the impact of cryptocurrencies on the stability and security of monetary systems, and urges governments to ” maintain the issuance and distribution of cash », given the risk of aggravation of the digital divide in developed countries.
Finally, while cryptocurrencies can facilitate remittances, they can also enable fraud and encourage tax evasion through illicit financial flows.
►Also read: Cryptocurrencies and digital currencies: States regain control
