Published: 11.04.2022
Article reading time:
2 minutes.
The International Monetary Fund (IMF) believes that in countries with total financial control, the oversight of digital assets is too weak.
The IMF has published a report, “Cryptocurrency, Corruption, and Capital Control: Correlations Between Countries,” which states that people in countries with higher levels of corruption and tighter financial regulation use cryptocurrencies more often:
“We found that the use of crypto assets is significantly associated with higher levels of corruption and stricter capital controls.”
The IMF specialists interviewed 110,000 residents of 55 countries. The authors of the report list factors that explain why bitcoin may be more popular in one country than in another. In countries with higher inflation rates, a popular cryptocurrency like bitcoin can be more stable than the local currency in terms of value now and in the long term.
Since poorer countries tend to have stricter capital control processes, barring foreign funds from participating in a country’s economy, cryptocurrencies can be a useful tool to evade taxes and other government restrictions.
“The pseudo-anonymity of crypto assets (when transactions require only digital identification) makes them a potential vehicle for generating illicit financial flows, including proceeds from corruption,” IMF analysts say.
The authors of the report emphasize that in such countries, more stringent international regulation of cryptocurrencies is needed, in particular the “Know Your Customer” (KYC) rule, that is, the requirement to identify crypto exchange customers.
The International Monetary Fund is not particularly loyal to cryptocurrencies. Almost all the statements of the fund’s specialists are aimed at tightening the regulation of cryptocurrencies in developing countries. In January, Tobias Adrian, director of the IMF’s Monetary and Capital Markets Department, said that the volatility of cryptocurrencies could create “immediate and serious risks” in developing countries.
Source: Bits
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