Cryptocurrencies are said to be the safest bet for developing countries, such as the Central African Republic, What makes Bitcoin legal tender?. However, the United Nations (UN) has warned in a report to third world countries about the risk associated with the asset class.
In a report titled “All That Glitters Is Not Gold,” the United Nations Conference on Trade and Development (UNCTAD) admitted that cryptocurrencies do have some advantages, however, their disadvantages far outweigh the benefits that people and businesses enjoy. financial institutions can obtain from them. According to the document, developing countries should ban bitcoin ads and subject all wallets and related exchanges to mandatory registration. The idea is to make cryptocurrencies less attractive. Other UN recommendations include taxing crypto transactions, banning financial institutions from holding digital assets, and ordering them not to offer any cryptocurrency-related services to customers.
UN backs digital asset initiatives
Penelope Hawkins, an economist and senior economic affairs officer at UNCTAD, explains that her advice has nothing to do with approving or disapproving of crypto.
It’s not about approving or disapproving [las criptomonedas], but to point out that there are social risks and costs associated with cryptocurrencies. This is a recommendation that applies to any speculative or high-risk financial product where returns are uncertain.
The United Nations believes that some of the concerns raised by critics regarding the use of crypto are genuine. According to them, cryptocurrencies are a threat to financial stabilitysince they prevent the authorities from limiting the flow of capital, allow illicit transactions or activities and unofficially replace national currencies, which in the long run endangers the monetary sovereignty of the nation.
Rohan Grey, a law professor at Willamette University School of Law who has been a consultant to the United Nations on digital currencies, has also admitted that a lack of regulation opens the way for fraud and scams that put at risk to customers.
The ecosystem is not fully mature. Allow to [la industria] aggressively marketed would be like having a new type of drug that hasn’t even gone through the FDA process and is advertising itself as a cancer solution.
As part of the advice, developing countries were encouraged to create their payment system and explore the possibility of creating a Central Bank Digital Currency (CBDC).
This document was motivated by the increasing use of digital currencies that skyrocketed during and after the pandemic. According to the UN, people are primarily interested in digital assets due to their ability to protect savings from depreciation and rising inflation.
Regardless of its position on digital assets, the UN has endorsed various initiatives that use such assets. Earlier this year, they exhibited a collection of NFT art called Boss Beauty Role Models during National Women’s Day.