Unctad: There are many risks associated with cryptocurrency use in developing countries

While private digital currencies have brought economic returns to some people and facilitated the flow of remittances, they are an unstable financial asset that may carry social risks and costs, the UN Trade and Development Organization (UNCTAD) said recently. For developing countries, the adoption of cryptocurrencies must be taken with caution. Unctad noted that the global reach of private digital currencies poses challenges for national regulatory responses. The global use of cryptocurrencies has grown exponentially during the coronavirus pandemic, including in developing countries. Unctad urges developing countries to take the following actions to curb the expansion of cryptocurrencies in developing countries: Ensure full financial regulation of cryptocurrencies by regulating cryptocurrency trading platforms, digital wallets and decentralized open finance, and prohibiting regulated financial institutions from holding cryptocurrencies (including stablecoins linked to fiat currencies) or offering related products to their customers; Restrict advertising related to cryptocurrencies as it does other risky financial assets; To provide a safe, secure and affordable public payment system for the digital age; Agree and implement global tax harmonisation on the tax treatment, regulation and information sharing of cryptocurrencies; Capital controls are redesigned to take into account the decentralized, borderless and anonymous nature of cryptocurrencies.