In India, 7.3% of the population owned a digital currency in 2021, the seventh highest in the world: UN.

Ukraine ranks first with 12.7%, followed by Russia (11.9%), Venezuela (10.3%), Singapore (9.4%), Kenya (8.5%) and the US (8.3%) ).

More than seven percent of India’s population owns the digital currency, according to the United Nations, which said cryptocurrency use has grown at an unprecedented rate worldwide during the COVID-19 pandemic.

The United Nations Trade and Development Organization UNCTAD reported that in 2021, developing countries accounted for 15 of the 20 largest economies in terms of the share of the population that owns cryptocurrencies.

Ukraine ranks first with 12.7%, followed by Russia (11.9%), Venezuela (10.3%), Singapore (9.4%), Kenya (8.5%) and the US (8.3%) ).

In India, 7.3% of the population owned a digital currency in 2021, ranking seventh among the world’s top 20 economies for digital currency ownership as a share of the population.

“The global use of cryptocurrencies has grown exponentially during the COVID-19 pandemic, including in developing countries,” UNCTAD said.

Three strategic reports released Wednesday said that while these private digital currencies have rewarded some and facilitated money transfers, they are a volatile financial asset that can also bring social risks and costs.

The policy brief, titled “All That Glitters Is Not Gold: The High Cost of Leaving Cryptocurrencies Unregulated,” examines the reasons behind the rapid spread of cryptocurrencies in developing countries, including facilitating money transfers and as a hedge against currency and inflation risks.

He said that the recent shocks in the digital currency market indicate that holding cryptocurrencies has private risks, but if the central bank intervenes to protect financial stability, then the problem will become public.

“If cryptocurrencies become a widespread means of payment and even unofficially replace domestic currencies (a process called cryptoization), this could threaten the monetary sovereignty of countries,” the company said.

In developing countries with unsatisfied demand for reserve currencies, stablecoins pose a particular risk. For some of these reasons, the International Monetary Fund expressed the view that cryptocurrencies pose a risk as legal tender, he said.

The policy brief, entitled “Public Payment Systems in the Digital Era: Responding to the Financial Stability and Security Risks of Cryptocurrencies”, focuses on the impact of cryptocurrencies on the stability and security of monetary systems and on financial stability.

“It is argued that a domestic digital payment system that serves as a public good could fulfill at least some of the reasons for using cryptocurrencies and limit the expansion of cryptocurrencies in developing countries,” he said, adding that depending on national capabilities and needs. monetary authorities could provide a central bank digital currency or, more easily, a fast retail payment system.

Given the risk of widening the digital divide in developing countries, UNCTAD urges authorities to maintain the issuance and distribution of cash.

The policy brief titled “The Price of Too Little Too Late: How Cryptocurrencies Can Undermine Domestic Resource Mobilization in Developing Countries” discusses how cryptocurrencies have become a new channel to undermine domestic resource mobilization in developing countries.

While cryptocurrencies can facilitate money transfers, they can also enable tax evasion and avoidance through illicit flows, as well as to tax havens where ownership is not easily identifiable.

In this way, cryptocurrencies can also reduce the effectiveness of capital controls, a key tool for developing countries to preserve their political space and macroeconomic stability, the company said.

UNCTAD called on authorities to take measures to limit the expansion of cryptocurrencies in developing countries, including ensuring comprehensive financial regulation of cryptocurrencies through regulation of crypto exchanges, digital wallets and decentralized finance, and banning regulated financial institutions from holding cryptocurrencies (including stablecoins) or offering related products. clients.

He also called for restrictions on cryptocurrency-related advertising, as with other high-risk financial assets; providing a secure, reliable and accessible public payment system adapted to the digital era; establishing global tax coordination on cryptocurrency tax regimes, regulation and information sharing, and overhauling capital controls to take into account the decentralized, borderless and pseudonymous features of cryptocurrencies.