Cryptocurrency Use Is More Common In Corrupt Countries, According To An IMF Study.
The International Monetary Fund (IMF) has called for more regulation of the cryptocurrency market, citing the extensive usage of digital assets in countries with a history of corruption or severe financial constraints.
According to IMF, cryptocurrency, among other things, allows citizens to undermine government authority by circumventing government-imposed trade prohibitions.
It also promotes criminal activities by assisting criminals in evading detection. By removing middlemen, cryptocurrency has the potential to destabilize and destroy existing financial systems.
The IMF report explains why countries may decide to compel intermediaries, such as digital currency exchanges, to implement know-your-customer (KYC) processes, which are identity verification rules designed to combat fraud, money laundering, and terrorism financing.
Similar policies have previously been introduced in certain nations, such as the United States.
With the global cryptocurrency market estimated to surpass $4 trillion by 2026, many countries are rushing to regulate it.
Moving Dirty Money Digitally
New schemes are being developed to commit various sorts of corruption and Ponzi scams as a result of the rise of Bitcoin and ether, which has created a frenzy among investors.
Digital assets, according to the IMF, might be utilized to move illicit funds or avoid banking regulations. However, no specific countries were mentioned by the organization.
Crypto assets could be used to move “corruption proceeds or avoid capital controls” in 55 countries, according to a recent IMF study.
Participants in the poll, which included between 2,000 and 12,000 people from each country, were asked if they planned to use or hold digital assets in 2020, following up on a recent study in which the group called for more standard digital currency governance across international borders.
The IMF indicated that it derived its baseline data on bitcoin adoption from information gathered by Statista of Germany in a research.
Regulating Instead Of Fighting
The IMF research said:
“The best strategy is not to fight but to figure out how to effectively regulate bitcoin,”
The researchers find that residents of countries with a well-developed traditional banking sector are less likely to feel the need for cryptocurrency.
There are a variety of reasons why one country’s virtual money may be more popular than another, according to the authors.
A popular cryptocurrency like bitcoin may be more stable than a native currency due to significant inflation.
Cryptocurrency can also be used to circumvent taxes and regulations because poorer countries often have stronger capital controls – measures that restrict the movement of foreign funds into and out of the country’s economy.
The IMF stated that its findings are significant, but that they should be interpreted with caution due to the small sample size and questionable data veracity.
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