Although some countries have banned cryptocurrencies entirely, the International Monetary Fund (IMF) believes this approach will not work in the long term, according to CoinDesk.
According to the IMF article on central bank digital currency ( CBDC ) adoption in Latin America and the Caribbean, banning cryptocurrencies may not be the best way to mitigate the risks involved, as the approach may not work in the long run. Instead, the region should focus on addressing the drivers of demand for cryptocurrencies, including citizens’ unmet need for digital payments, and improving transparency, by documenting crypto asset trading in national statistics
If designed well, CBDCs can enhance the usability, resiliency, and efficiency of payment systems, while enhancing financial inclusion in Latin America and the Caribbean, the IMF said.
The IMF article highlights four Latin America, Brazil, Argentina, Colombia, and Ecuador, among the top 20 in accepting crypto assets by 2022. Even though Argentina has banned payment platforms The bank offered cryptocurrencies to customers in May 2023 due to concerns about financial stability, tax fraud, corruption, and money laundering. However, people in this country still look to cryptocurrencies to secure their assets against economic fluctuations. Besides, paying with digital currency is also cheaper and faster.
According to CoinTelegraph, the IMF thinks clear regulations can solve these problems. Of the 19 Latin American jurisdictions studied in the IMF report mid-2022, 12 already have special regulations or are in the process of creating a regulatory framework for cryptocurrencies
Meanwhile, the Bahamas was the first country in the world to issue a CBDC, Sand Dollar, in October 2020. In 2022, El Salvador also became the first country in the world to legalize Bitcoin. However, the IMF says El Salvador’s approach may not be the best. The IMF has warned El Salvador of regulatory risks associated with cryptocurrencies that will make financial markets vulnerable.
The IMF often makes public statements against countries accepting cryptocurrencies as legal tender. On June 19, IMF Money and Capital Markets Director Tobias Adrian proposed a payment system that uses a ledger to record CBDC transactions, but the idea has received criticism. harsh quotes from people in the field of cryptocurrencies