A survey published by the IMF (International Monetary Fund) states that countries with a high degree of corruption and strict capital control systems are more likely to adopt cryptocurrencies.
Entitled “Cryptocurrency, Corruption, and Capital Controls: Cross-Country Correlation,” the survey of 110,000 citizens from 55 countries to investigate the factors underlying the growing adoption of crypto activities revealed that corruption is often associated with severe restrictions on international financial movements and cryptocurrencies would be used as a subterfuge to allow this type of transaction discreetly.
The pseudonymous nature of digital assets would be a useful resource for hiding illicit financial movements, according to the report:
“Transactions made with crypto assets only require digital identities, making them a potential vehicle for illicit flows, including flows of funds from corruption.”
The argument is also used to reiterate the need to impose stricter laws for the trading and movement of digital assets around the world. The report argues that it is urgent to impose anti-money laundering (AML) and identification of cryptocurrency user (KYC) practices used by cryptocurrency exchanges.ending once and for all what is identified as “excessive freedoms” that have characterized the cryptocurrency market to date.
Regulatory frameworks that oblige intermediaries to apply KYC and AML practices are essential to combat fraud, money laundering, terrorist financing and non-compliance with economic sanctions.
The report also points out that, on the contrary, in countries whose financial systems are more developed and regulated, the adoption of crypto assets tends to be lower:
“Inhabitants of countries where the traditional financial sector is well developed may be less likely to feel the need to use cryptocurrencies.”
Ignored Benefits
The report, however, cannot be considered exempt, as the monetary institution has repeatedly expressed its reservations against cryptocurrencies. Thus, once again, the IMF simply omits or ignores the potential utility of crypto activities as a store of value and hedge against inflation in economically underdeveloped countries. In addition to facilitating the transit of international remittances at much lower rates than those practiced by financial institutions legally authorized to carry out this type of transaction.
Cases that show that cryptocurrencies are not the most suitable instruments for the illicit movement of securities are becoming more and more frequent, according to Cointelegraph.
Just to mention the most recent: the identification of the address linked to the Ronin hack, sidechain of the popular play-to-earn game Axie Infinity, the seizure of funds diverted in the historic Bitinex exchange hack, and the acknowledgment by from US Treasury Secretary Janet Yellen that cryptocurrencies have not played an effective role in potential Russian attempts to circumvent sanctions placed on the country by Western powers suggest the new IMF report is biased and it does not adjust to the reality of the facts.
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