The United Nations (UN) has recommended that developing countries take strong action against cryptocurrencies, warning of the risks associated with the industry’s lack of regulation.
According to a report titled “All that glitters is not gold” published by the United Nations Conference on Trade and Development (UNCTAD), the organization acknowledged that cryptocurrencies have some advantages. However, their disadvantages far outweigh the benefits that individuals and financial institutions can reap.
UNCTAD has proposed that developing countries ban bitcoin advertising and require all cryptocurrency wallets and exchanges to register with regulators. Other UN recommendations include imposing taxes on cryptocurrency transactions, banning financial institutions from holding digital assets, and offering customers any services related to cryptocurrencies.
Economist and UNCTAD Senior Economic Affairs Officer Penelope Hawkins explained that these recommendations have nothing to do with the approval or disapproval of cryptocurrencies. The fact is that crypto assets carry social risks, so they should be subject to the requirements applicable to any financial products with a high level of risk or speculative instruments. The authors of the report expressed solidarity with the concerns of Hawkins, believing that cryptocurrencies can pose a threat to financial stability, as they are used for illegal activities.
Willamette University School of Law Associate Professor Rohan Gray, who works as a consultant to the UN on digital currencies, also acknowledged that the lack of regulation of the industry opens the way for cryptocurrency fraud. As Gray puts it, the cryptocurrency ecosystem is not yet mature, so allowing the industry to aggressively market itself is like “promoting a new cancer drug that could be fatal.”
In addition, the UN strongly recommends that developing countries create their own payment system and explore the possibility of creating a state stablecoin. According to Grey, governments should not worry about regular money losing value against central bank digital currencies, as CBDC can always be exchanged for a government-issued coin. The report also mentions the successful initiative of China to create a digital yuan, while cryptocurrencies are banned in China.
Recall that at the end of June, the Central Bank of Morocco began to develop legislation to combat the illegal use of cryptocurrencies. In April, Iranian Deputy Minister of Communications Reza Bagheri Asl said that Iran will never recognize cryptocurrencies as a means of payment, but the Iranian central bank is preparing to launch its own digital currency.
