Provided Policy Brief
According to UNCTAD, part of the UN Secretariat, private digital currencies worldwide make national regulatory measures difficult. While some people have benefited from digital currencies, they are still unstable financial assets that can also have adverse societal effects.
The risks and costs associated with cryptocurrencies, particularly the dangers they pose to financial stability, the mobilization of domestic resources, and the security of monetary systems, are covered in depth in three policy briefs published by UNCTAD.
Claims Cryptocurrencies Pose Risks
As reported by UNCTAD, cryptocurrencies might reduce the effectiveness of capital controls, which are frequently used in developing nations to maintain macroeconomic stability.
While cryptocurrencies can make remittances easier, UNCTAD cautioned that they might also make it easier for people to evade paying taxes through illicit financial transactions, much like a tax haven where ownership is difficult to trace.
According to UNCTAD, stablecoins provide particular concerns in developing nations with a high demand for reserve currencies. The dangers that cryptocurrencies may pose as forms of legal money have also drawn the attention of the International Monetary Fund.
Suggested regulating crypto
UNCTAD suggested regulating crypto exchanges, digital wallets, and decentralized finance. Additionally, financial institutions might not be allowed to retain cryptocurrencies and stablecoins or provide ancillary services.
Also, the authorities campaigned for curbs on cryptocurrency ads and called for international cooperation between regulatory, information-sharing, and taxing bodies related to cryptocurrencies.
Finally, it proposed reworking capital regulations to account for cryptocurrencies’ decentralized, global, and pseudonymous characteristics.
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Source: Cryptocurrency - investing.com
