The International Monetary Fund recommends the countries to focus on addressing crypto demand instead.
The ban of cryptocurrency may not be effective in the long run, according to the IMF. Based on the industry research in Latin America and the Caribbean, the IMF has concluded that states banning the use of digital assets deprive themselves of benefits linked to new types of assets.
“While a few countries have completely banned crypto assets given their risks, this approach may not be effective in the long run.”
Instead, the IMF suggests the focus should be directed on factors driving the demand, including citizens’ unmet digital payment needs and improving transparency.
Central Bank Digital Currency (CBDC) could help solve many problems – improve the convenience of currency use, sustainability and payment system effectiveness. It can also expand people’s access to financial services. But to make sure crypto-currency remains part of a secure payment system, it has to be regulated, underlines the agency.
According to Chainalysis data, four Latin American countries – Brazil, Columbia, Argentina and Ecuador – in 2022 ranked in the top-20 in global adoption of crypto assets. And twelve out of nineteen jurisdictions in the region, surveyed by IMF, already have a special regulatory framework or are in the process of creating one.