The development arm of the United Nations, UNCTAD, believes that banks should be banned from holding crypto while suggesting that developing countries should implement extensive restrictions on the use of cryptocurrencies, given the risks they present for the collection of taxes. The United Nations Conference on Trade and Development (UNCTAD), in a series of reports released Thursday, warns that the growing use of cryptography for domestic payments and by migrant workers sending remittances home poses a challenge to the authority of States in monetary matters, which can lead to the “leakage” of development funds.
The agency suggests a flurry of regulatory restrictions that we’ve already seen a number of countries take, but not all at once. These include imposing higher taxes on crypto transactions, requiring exchanges and wallets to register with regulators, and limiting or banning crypto advertisements.
“The benefits that cryptocurrencies can bring to some people and financial institutions are overshadowed by the risks and costs they entail, especially in developing countries,” UNCTAD said, citing risks such as the tax evasion and losses due to price fluctuations that may need to be bailed out. by central banks.
As a CoinDesk report points out, the document advises countries “to prohibit regulated financial institutions from holding stablecoins and cryptocurrencies or offering related products to customers.”
By virtue, stablecoins are essentially cryptocurrencies that aim to maintain their value against an established fiat currency such as the US dollar – but as seen in the recent terraUSD crash, they fail to do so. not always.
Figures cited by UNCTAD show that crypto is particularly popular in Russia, Ukraine and Venezuela, three countries affected by sanctions, war and hyperinflation. As of November 2021, 41 developing countries had either banned banks from trading crypto or blocked exchanges from offering crypto to retail investors, and nine banned crypto outright, according to the report.