UN tells developing countries to ban Bitcoin ads and regulate crypto

The United Nations (UN) recently published a policy brief recommending developing nations take stricter measures against cryptocurrencies to lower the risks associated with it. 

The brief titled “All the glitters is not gold,” first published in June at the UN’s Conference of Trade and Development (UNCTAD), claims that the disadvantages of cryptocurrencies far outweigh the benefits they might bring.

“The global use of cryptocurrencies increased exponentially during the coronavirus disease (COVID-19) pandemic. Such private digital currencies have become particularly prevalent in developing countries, entailing considerable risks and costs regarding national monetary sovereignty, policy space and macroeconomic stability,” the brief stated. 

According to the UN, the use of cryptocurrency expanded by 2,300 between September 2019 and June 2021, with most of that growth in Developing countries. As a result, the policy brief explores the risks and costs of using digital currencies in developing nations and gives policy recommendations for such countries to consider. 

“This is not about approving or disapproving [of crypto] but pointing out that there are social risks and costs associated with cryptocurrency,” Penelope Hawkins, an economist and senior economic affairs officer at told Decrypt. “This is a recommendation that applies to any speculative or high-risk financial products where returns are uncertain.”

According to the agency, cryptocurrencies can threaten the financial stability of developing countries, foster illicit activity, prevent authorities from limiting the flow of capital, and jeopardize the monetary sovereignty of the nation. 

In the brief, the UN recomends that governments from developing nations “make the use of cryptocurrencies less attractive” by imposing taxes on transactions, requiring a mandatory registration of all crypto wallets, and banning all advertisements related to digital currencies.

The agency also plays with the idea of banning financial institutions from having digital assets and preventing them from offering crypto-related services. 

As final advice to developing nations, the brief says that countries should develop their payment systems instead of turning to digital currency or exploring the creation of a central bank digital currency (CBDC).