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UN Agency Urges Authorities to Curb Cryptocurrency Expansion in Developing Countries – Regulation Bitcoin News

A United Nations trade body has recommended a series of policy actions to “restrain the expansion of cryptocurrencies in developing countries.” The intergovernmental group stressed that countries’ monetary sovereignty could be threatened if cryptocurrencies became a widespread means of payment.

United Nations Trade Organization Encryption Policy Recommendations

The United Nations Conference on Trade and Development (UNCTAD) last week urged authorities in developing countries around the world to take action to prevent the widespread use of cryptocurrencies.

UNCTAD is a permanent intergovernmental organization established by the United Nations General Assembly in 1964. Part of the United Nations Secretariat. This group reports to the United Nations General Assembly and the Economic and Social Council. UNCTAD has 195 member countries and 204 projects in 70 countries, according to its website.

“The global use of cryptocurrencies has increased exponentially during the Covid-19 pandemic, including in developing countries,” the group noted. “Though these private digital currencies reward some and facilitate remittances, they are volatile financial assets that can pose social risks and costs.”

The intergovernmental agency elaborated:

If cryptocurrencies become widespread and unofficially replace domestic currencies (a process known as cryptography), this could jeopardize a country’s monetary sovereignty.

“While cryptocurrencies can facilitate remittances, they also have the potential to enable tax evasion and evasion through illicit flows, such as to tax havens where ownership is not easily identifiable,” explained UNCTAD. did. “In this way, cryptocurrencies could also curb the effectiveness of capital controls, an important tool for developing countries to maintain policy space and macroeconomic stability.”

The industry group said it has released three related policy briefs. One, published June 13, outlines the high costs of keeping cryptocurrencies unregulated. Another article, published on June 22, describes a public payment system that addresses the financial stability and security risks of cryptocurrencies. A third brief, published on August 10, focuses on how cryptocurrencies could undermine domestic resource mobilization in developing countries.

One country that has adopted Bitcoin as legal tender alongside the US dollar is El Salvador, despite repeated warnings by the International Monetary Fund (IMF). Since BTC became legal tender last September, the country has purchased 2,381 bitcoins for its national treasury.

UNCTAD has recommended a series of policy actions, stating that it “urges authorities to take the following actions to curb the expansion of cryptocurrencies in developing countries.”

The first recommendation is to “regulate cryptocurrency exchanges, digital wallets and decentralized finance so that regulated financial institutions do not hold cryptocurrencies (including stablecoins) or offer related products to their customers. to ensure comprehensive financial regulation of virtual currencies by banning

Second, the authorities will “restrict cryptocurrency-related advertising”, “provide a safe, reliable and affordable public payment system adapted to the digital age”, “tax treatment of cryptocurrencies, Regulations, and global tax alignments on information sharing must be agreed upon and enforced. The final recommendation calls on authorities to:

Redesign capital management considering the decentralized, borderless and pseudonymous nature of cryptocurrencies.

What are your thoughts on the United Nations Trade Organization urging authorities in developing countries to curb the widespread use of cryptocurrencies? Let us know in the comments section below.

Kevin Helms

An Austrian economics student, Kevin has been an evangelist since he discovered Bitcoin in 2011. His interests lie in Bitcoin security, open source systems, network effects, and the intersection of economics and cryptography.

image credit: Shutterstock, Pixabay, Wiki Commons, Lev Radin

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