The International Monetary Fund (IMF) says an examination of crypto asset adoption reveals it is correlated with corruption and capital controls.

In a new study, the IMF says the use of cryptocurrencies is “significantly and positively” linked to corruption and capital controls, or restrictions imposed on a national economy to limit the inflow and outflow of money. foreign.

“The empirical investigation into the factors underlying the growing use of crypto assets is in its infancy, due to data limitations. In this article, we present a simple cross-country analysis based on recently surveyed data. published.

We explore the correlation of crypto asset usage with corruption indicators, capital controls, a history of high inflation, and other factors. We find that the use of crypto assets is significantly and positively associated with corruption and capital controls.

The IMF says crypto would benefit from tougher regulations, such as requiring exchanges to implement strict know-your-customer (KYC) procedures, instead of taking a more ” let it go”.

IMF researchers also say that crypto technology exacerbates some of the problems with using cash, such as the ability to send large amounts of almost untraceable funds across national borders.

“The pseudonymization of crypto assets (transactions requiring only digital identities) makes them a potential vector of illicit flows, including flows of proceeds of corruption. This pseudonymity is not an intrinsic feature of the underlying technology, but rather a choice made in the design and practice of most existing crypto-assets.

While cash offers complete anonymity and large denominations have long been seen as an aid to crime and tax evasion, crypto assets in their current form allow even larger amounts to be moved quickly and with ease. easier, including across national borders.

Ultimately, the report indicates that more information is needed to determine the motivation of entities and individuals to adopt virtual assets.

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