World News | In India, 7.3% of the population owned a digital currency in 2021, the 7th highest in the world: UN
United Nations, Aug 11 (PTI) More than seven percent of India’s population owns digital currency, according to the UN, which said cryptocurrency usage has grown globally at an unprecedented rate during the COVID-19 pandemic.
The United Nations trade and development agency, UNCTAD, said that in 2021, developing countries make up 15 of the top 20 economies when it comes to the share of population that owns cryptocurrencies.
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Ukraine leads the list with 12.7%, followed by Russia (11.9%), Venezuela (10.3%), Singapore (9.4%), Kenya (8.5% ) and the United States (8.3%).
In India, 7.3% of the population owned digital currency in 2021, ranking seventh in the list of the top 20 global economies for digital currency ownership as a proportion of population.
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“Global use of cryptocurrencies has increased exponentially during the COVID-19 pandemic, including in developing countries,” UNCTAD said.
In three policy briefs released on Wednesday, he said that while these private digital currencies have rewarded some and facilitated remittances, they are an unstable financial asset that can also carry social risks and costs.
The policy brief titled “All that glitters is not gold: the high cost of unregulated cryptocurrencies” examines the reasons for the rapid adoption of cryptocurrencies in developing countries , including facilitating remittances and as a hedge against currency and inflation risks.
He said recent digital currency market shocks suggest that there are private risks involved in holding crypto, but if the central bank steps in to protect financial stability, then the issue becomes public.
“If cryptocurrencies become a widespread means of payment and even unofficially replace national currencies (a process called cryptoization), it could jeopardize countries’ monetary sovereignty,” he said.
In developing countries where the demand for reserve currencies is not met, stablecoins present particular risks. For some of these reasons, the International Monetary Fund has expressed the view that cryptocurrencies pose risks as legal tender, he said.
The policy brief titled “Public Payments Systems in the Digital Age: Responding to Financial Stability and Security Risks of Cryptocurrencies” focuses on the implications of cryptocurrencies for the stability and security of cryptocurrencies. monetary systems, and for financial stability.
“It is argued that a national digital payment system that serves as a public good could address at least some of the reasons for crypto usage and limit the expansion of cryptocurrencies in developing countries,” a- he said, adding that depending on national capacities and needs, monetary authorities could provide a central bank digital currency or, more easily, a rapid retail payment system.
Given the risk of increasing the digital divide in developing countries, UNCTAD urges the authorities to maintain the issuance and distribution of cash.
The policy brief titled “The Cost of Doing Too Little Too Late: How Cryptocurrencies Can Undermine Domestic Resource Mobilization in Developing Countries” explains how cryptocurrencies have become a new channel undermining resource mobilization national in developing countries.
While cryptocurrencies can facilitate remittances, they can also enable tax evasion and evasion through illicit flows, as if heading for a tax haven where ownership is not easily identifiable.
In this way, cryptocurrencies can also hamper the effectiveness of capital controls, a key instrument for developing countries to preserve policy space and macroeconomic stability, he said.
UNCTAD urged authorities to take steps to curb the expansion of cryptocurrencies in developing countries, including ensuring comprehensive financial regulation of cryptocurrencies by regulating crypto exchanges, digital wallets and decentralized finance, and prohibiting regulated financial institutions from holding cryptocurrencies (including stablecoins) or offering related products. to customers.
He also called for restricting advertising related to cryptocurrencies, as with other high-risk financial assets; provide a safe, reliable and affordable public payment system fit for the digital age; implement global tax coordination regarding cryptocurrency tax treatments, regulation, and information sharing; and rethink capital controls to account for the decentralized, borderless, and pseudonymous characteristics of cryptocurrencies.
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