More than seven percent of the population in India owns digital currencies, which said that the usage of crypto rose unprecedentedly after the pandemic.
The UNCTAD or UN trade and development body said that in the year 2021, most developing countries accounted for the number 15 among the top 20 economies when it comes to the population share that owns crypto. Ukraine has topped that list with more than 12 percent, which is followed by Singapore with 9.4 percent, Russia with 11.9 percent, Venezuela with 10.3 percent, Kenya with 8.5 percent, and the US with 8.3 percent.
In India, nearly 7.3 percent of the total population owned digital currency in the year 2021, ranked seven in the list of the top twenty global economists for digital currency owners as the share of the population.
The global usage of cryptocurrency has increased exponentially during the pandemic, especially in developing countries, said the UN trade and development body. It also has been said that these private digital currencies reward and facilitate remittances, as they are unstable assets that can bring costs and social risks.
The policy has briefed the title “All that glitters is not gold”: The cost of leaving cryptocurrency unregulated” which examines reasons for the rapid uptake of the cryptocurrency, mostly in developing countries, that includes the facilitation of remittances and hedge against the currency, and inflation risks.
Recently, in the market, digital currency shocks suggest that there are various private risks that hold cryptocurrency. But, if the steps of the central bank protect financial stability, then this problem becomes public.
Cryptocurrencies have become a widespread mode of payment that unofficially replace domestic currencies and could jeopardize a country’s monetary sovereignty.
In most developing countries along with unmet demand to reserve currencies, and particular risks of the stablecoins pose. Due to this reason, the IMF or International Monetary Fund expressed the complete view that crypto poses risks as legal tender.
This policy brief titled “The public payment systems in today’s digital era responds to the financial security related to the risks of cryptocurrencies focuses on the implications of crypto for the security and stability of the monetary systems in order to financial stability.
It is under the argument that the system of domestic digital payment serves as a public good that could fulfill the reasons for the use of crypto and limit the expansion of cryptocurrencies in most developing countries. Additionally, depending on national needs and capabilities, the monetary authority could provide a digital currency of the central bank or a fast retailing payment system.
According to the risk of accentuation, the digital divide is developing in countries. Thus, UNCTAD urges responsible authorities to maintain the distribution and issuance of cash.
While crypto facilitates remittances, they also enable avoidance and tax evasion through illicit flows. It is just as if a tax haven where the owner is not identifiable. In a similar way, crypto may also curb the effectiveness of capital controls, and is a key instrument for most developing countries in order to preserve macroeconomic stability and policy space.
The UN trade and development body urged the authorities to take immediate actions to curb cryptocurrencies expansion in developing countries, that ensures comprehensive financial regulation of crypto money through the regulation of crypto exchanges, decentralized finance, digital wallets, and banning regulator financial institutions to hold cryptocurrencies and offer related products to our clients.
It is also used to restrict advertisements that are related to cryptocurrencies, for high-risk financial assets that are providing a safe, affordable, and reliable public payment system that is adapted to the digital era. It implements global tax coordination with the cryptocurrency tax regulation, treatments, and information sharing with redesigning capital controls in order to take account of borderless, decentralized, and pseudonymous features of the cryptocurrencies.