A United Nations trade body has recommended a set of policy measures to “curb the expansion of cryptocurrencies in developing countries.” The intergovernmental group pointed out that if cryptocurrencies become a widespread means of payment, it could jeopardize the monetary sovereignty of countries.
United Nations Trade Body Cryptography Policy Recommendations
The United Nations Conference on Trade and Development (UNCTAD) urged authorities in developing countries around the world to take action to prevent the widespread use of cryptocurrencies last week.
UNCTAD is a permanent intergovernmental body created by the United Nations General Assembly in 1964. It is part of the United Nations Secretariat. The group reports to the United Nations General Assembly and the Economic and Social Council. UNCTAD has 195 member states and 204 projects in 70 countries, its website says.
“The 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 facilitated remittances, they are an unstable financial asset that can also carry social risks and costs.”
The intergovernmental body detailed:
If cryptocurrencies become a widespread means of payment and even unofficially replace national currencies (a process called cryptography), it could jeopardize the monetary sovereignty of countries.
“While cryptocurrencies can facilitate remittances, they can also enable tax evasion and evasion through illicit flows, as if heading for a tax haven where property is not easily identifiable,” UNCTAD said. “In this way, cryptocurrencies can also limit the effectiveness of capital controls, a key instrument for developing countries to preserve policy space and macroeconomic stability.”
The trade body explained that it had issued three related guidance notes. One, published on June 13, describes the high cost to leave cryptocurrencies unregulated. Another, published on June 22, discusses public payment systems in response to the financial stability and security risks of cryptocurrencies. The third memoir, published August 10, focuses on how cryptocurrencies can undermine domestic resource mobilization in developing countries.
El Salvador is one country that has adopted bitcoin as legal tender alongside the US dollar despite repeated warnings from the International Monetary Fund (IMF). The country has purchased 2,381 bitcoins for its treasury since BTC became legal tender in September last year.
UNCTAD recommended a set of policy actions, saying it “urges authorities to take the following steps 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 prohibiting regulated financial institutions from holding cryptocurrencies (including stablecoins) or ‘offer related products to customers’.
Second, authorities should “restrict cryptocurrency-related advertisements,” “provide a safe, reliable, and affordable public payment system fit for the digital age,” and “agree and implement global tax coordination regarding tax treatments.” , regulation and sharing of information about cryptocurrencies. The final recommendation urges authorities to:
Rethink capital controls to accommodate the decentralized, borderless, and pseudonymous characteristics of cryptocurrencies.
What do you think of the United Nations trade body urging authorities in developing countries to curb the widespread use of cryptocurrencies? Let us know in the comments section below.
An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.
Image credits: Shutterstock, Pixabay, Wiki Commons, lev stingy
Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.