Cryptocurrencies are most commonly used in countries with high levels of corruption, according to the IMF

A survey published by the IMF (International Monetary Fund) states that countries with high levels of corruption and strict capital control systems are more likely to adopt cryptocurrencies.

The survey of 110,000 citizens from 55 countries, entitled “Cryptocurrency, Corruption, and Capital Controls: Cross-Country Correlation” to examine the factors underlying the increasing acceptance of crypto activities, found that corruption is often associated with strong restrictions on international Financial movements and cryptocurrencies connected is used as an excuse to discreetly allow this type of transaction.

The pseudonymous nature of digital assets would be a useful resource to hide illicit financial movements, according to the report:

“Transactions involving crypto assets only require digital identities, making them a potential vehicle for illicit flows, including corruption-related cash flows.”

Cryptocurrencies are most commonly used in countries with high levels of corruption, according to the IMF
Cryptocurrencies are most commonly used in countries with high levels of corruption, according to the IMF

The argument is also used to reinforce the need to introduce stricter laws governing the trading and circulation of digital assets around the world. The report argues that there is an urgent need to adopt anti-money laundering (AML) and cryptocurrency user identification (KYC) practices used by cryptocurrency exchanges.ending once and for all what has been termed the “excessive freedoms” that have characterized the cryptocurrency market to this day.

Regulatory frameworks that oblige intermediaries to employ 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, in contrast, in countries whose financial systems are more developed and regulated, the acceptance of crypto assets tends to be lower:

“Residents of countries where the traditional financial sector is well developed may feel less need to use cryptocurrencies.”

Ignored Benefits

However, the report cannot be considered exempt as the financial institution has repeatedly expressed its reservations about cryptocurrencies. Thus, once again, the IMF simply leaves 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 transfers at much lower rates than those practiced by financial institutions authorized by law to carry out this type of transaction.

According to Cointelegraph, cases showing that cryptocurrencies are not the best vehicles for illicit securities trading are mounting.

To name just the most recent: identification of address associated with Ronin hack, sidechain of popular play-to-earn game Axie Infinity, seizure of funds diverted in historic Bitinex exchange hack, and confirmation by US Treasury Secretary Janet Yellen that cryptocurrencies have not played an effective role in possible Russian attempts to circumvent sanctions imposed on the country by Western powers suggest the new IMF report is biased and does not adhere to the Adjust reality to facts.

Clarification: The information and/or opinions expressed in this article do not necessarily reflect the views or editorial line of Cointelegraph. The information contained herein should not be construed as financial advice or investment recommendation. All investment and trading movements involve risk and it is the responsibility of each person to conduct their proper research before making any investment decision.

Investing in crypto assets is not regulated. They may not be suitable for retail investors and you may lose the entire amount invested. The services or products offered are not intended for and are not accessible to investors in Spain.

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