IMF Study Confirms Crypto Use Is More Popular in Corrupt Countries
The International Monetary Fund has advocated for more regulation of the cryptocurrency market, noting extensive usage of digital assets in countries considered corrupt or subject to harsh financial restrictions.
Among other aspects, cryptocurrency empowers people to undermine government authority by circumventing government-imposed trade barriers.
Additionally, it promotes illegal conduct by supporting criminals in evading law enforcement. By removing intermediaries, bitcoin has the potential to wreak havoc on and destroy the current financial system.
The IMF research indicates why nations may opt to require intermediaries, such as digital currency exchanges, to implement know-your-customer (KYC) procedures — identity verification requirements designed to fight fraud, money laundering, and terrorist funding.
Certain nations, including the United States, have previously enacted such legislation. With the global cryptocurrency market anticipated to surpass $4 trillion in value by 2026, various nations are rushing to regulate it.
With the emergence of Bitcoin and ether causing a frenzy among investors, new strategies for committing different sorts of corruption and Ponzi schemes are being devised.
Digitally Transferring Dirty Money
According to the IMF, digital assets might be used to facilitate the transfer of illegal cash or to avoid capital controls. However, the organization made no mention of any particular country.
According to a recent IMF report, crypto assets might be used to transfer “corruption profits or circumvent capital restrictions” in 55 countries.
The survey, which included between 2,000 and 12,000 respondents from each country, asked respondents if they would use or own digital assets in 2020, a response to the organization’s recent report urging for more standard digital currency administration across international borders.
The IMF indicated that it obtained its baseline statistics on bitcoin use from data collected in a research conducted by Germany’s Statista.
“The best course of action is not to fight but to find out how to govern bitcoin efficiently,” the IMF report said.
“Residents of countries with a robust conventional banking system may be less reliant on bitcoin,” the researchers conclude.
The authors identified a variety of reasons why one country’s virtual money may be more popular than another.
Because of the high rate of inflation, a popular cryptocurrency like bitcoin may be more stable than a local currency.
Additionally, since poorer nations often have more restrictive capital controls — measures that limit the flow of foreign cash into and out of the country’s economy — cryptocurrencies may be used to circumvent taxes and restrictions.
The IMF said that although its results are interesting, they should be taken carefully due to the study’s small sample size and questionable data integrity.