The UN believes that cryptocurrencies could threaten the monetary sovereignty of developing countries, and recommends strict rules to restrict their use. A recently published policy brief by the United Nations recommended that developing countries take action against cryptocurrencies, warning of the risks associated with a lack of regulation of the sector.
In the document titled “All that glitters is not gold”, first published in June, the United Nations Conference on Trade and Development (UNCTAD) states that the disadvantages that cryptocurrencies pose for these nations far outweigh the benefits. they can contribute to individuals and financial institutions.
And the document goes so far as to suggest that developing nations require mandatory registration of all cryptocurrency wallets and ban cryptocurrency-related advertising.
“It’s not about approving or disapproving [las criptomonedas]but to point out that there are risks and social costs associated with cryptocurrencies,” Penelope Hawkins, an economist and head of economic affairs at UNCTAD, told Decrypt. “This is a recommendation that applies to any speculative or high-risk financial product where returns are uncertain.
Similarly, UNCTAD cited a study showing the leading countries in cryptocurrency adoption.
Venezuela is in third place worldwide, only surpassed by Ukraine and Russia, two countries that are currently in the midst of a military conflict. According to the study cited by the organization, 1 in 10 Venezuelans already uses cryptocurrencies (10.3% adoption). In comparison, Colombia registers 6.1% adoption, the United States 8.3% Brazil 4.1%
Percentage of adoption of cryptocurrencies in the world. Venezuela is in third place.
The intergovernmental organization warned that cryptocurrencies could threaten the financial stability of developing nations, enable illicit financial activity, prevent authorities from limiting the flow of capital, and also endanger the monetary sovereignty of nations by unofficially substituting national currencies. .
The report recommended that governments “make the use of cryptocurrencies less attractive” by imposing taxes on transactions using this technology and requiring the mandatory registration of digital wallets and cryptocurrency exchanges.
It also proposed the idea of banning financial institutions from holding digital assets and preventing them from offering cryptocurrency-related services to their customers.
Developing countries should restrict or ban advertising by cryptocurrency companies in public places or on social media platforms, the conference proposed, saying it is an “urgent need in terms of consumer protection in developing countries.” low levels of financial literacy” that could lead to “significant losses,” according to the political report.
Rohan Grey, a professor of law at Willamette University School of Law, has worked as a consultant to the United Nations on digital currencies and said the lack of regulation of cryptocurrencies has a documented history of harming consumers by allowing fraud and scams. “The ecosystem is not fully mature,” he told Decrypt. “Allow to [la industria] marketed aggressively would be like having a new type of drug that hasn’t even gone through the FDA process touting that it solves cancer.”
The report’s final advice is for nations to develop their own payment systems that serve as a public good, in the same way that government-built infrastructure does, and to explore the creation of a central bank digital currency (CBDC). .
CBDCs are a digitized form of fiat money issued by public monetary authorities.
Although some CBDCs work in the same way as cryptocurrencies, they are issued by governments and their value is backed by them. Some developing countries have already introduced CBDCs, such as the Bahamas, which calls their version the Sand Dollar or Sand Dollar.
“You don’t have to worry about the money itself becoming worthless with CBDCs the way it is with stablecoins,” Gray said. “A government-issued dollar can always be exchanged for a government-issued dollar.” Although he believes that CBDCs have associated risks in terms of surveillance and censorship, he said that the same concerns apply to stablecoins and that the potential for default makes them a less favorable asset that seeks parity with fiat currencies when compared.
The report references China’s efforts to establish a CBDC and mentions it as one of nine developing countries that have outright banned cryptocurrencies.
This list also includes Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia. One of the reasons that has led UNCTAD to publish the report is the growing adoption of cryptocurrencies around the world, which has been accelerated by the pandemic. The ease with which remittances can be sent spurred people to the technology, according to the report, as well as the idea that it could help safeguard household savings in times of currency depreciation and rising inflation. .
“There is no one-size-fits-all policy answer,” the conference was told, but countries were urged to take a forward-looking approach to enforcement. “Doing too little or taking action too late will lead to higher costs in the future.”
The United Nations has a history of using digital assets to promote different initiatives.
Earlier this year, the United Nations exhibited a collection of NFT art called Boss Beauty Role Models as part of International Women’s Day, which the organization has celebrated since 1975. And in 2021, the UN backed a contest called DigitalArt4Climate, in in which contestants created NFTs designed around the theme of climate change.
The winners exhibited their artwork at the Climate Change Conference in Scotland.
That same year, the United Nations International Children’s Emergency Fund (UNICEF) announced the launch of a series of NFTs on Ethereum to celebrate the organization’s 75-year history and raise funds for the Giga initiative, which helps Internet connections from schools around the world.
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