The International Monetary Fund (IMF) has renewed its call against the adoption of Bitcoin and other cryptocurrencies, citing economic risk among others.
In a statement issued on October 1 and seen by Ripples Nigeria on Sunday, IMF admitted that cryptocurrencies improve access to finance but the challenges and risk tied to the unregulated digital asset are higher than the advantages.
The Bretton Woods institution listed quick and easy payments and inclusive access to previously “unbanked” parts of the world as part of the new opportunities in the crypto ecosystem.
It said crypto assets such as Bitcoin, Ethereum, Ripples, Doge, and other stables coins could aid money laundering and terrorism financing, adding that the anonymity it offers create regulatory problems.
IMF said: “The (pseudo) anonymity of crypto assets also creates data gaps for regulators and can open unwanted doors for money laundering as well as terror financing.
“Although authorities may be able to trace illicit transactions, they may not be able to identify the parties to such transactions. Additionally, the crypto ecosystem falls under different regulatory frameworks in different countries, making coordination more challenging.
“For example, most transactions on crypto exchanges happen through entities that operate primarily in offshore financial centers. This makes supervision and enforcement not only challenging, but nearly impossible without international collaboration.”
While picking out the problems of cryptocurrency usage, IMF said many entities issuing stable coins do not have a dependable operational structure, prone to hackers and causing users to lose their funds invested in the assets.
“Many of these entities lack strong operational, governance, and risk practices. Crypto exchanges, for instance have faced significant disruptions during periods of market turbulence.
“There are also several high-profile cases of hacking-related thefts of customer funds. So far, these incidents have not had a significant impact on financial stability. However, as crypto assets become more mainstream, their importance in terms of potential implications for the wider economy is set to increase,” it added.
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.
If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
SPECIAL REPORT: Lack of legal provisions, cultural sentiments fueling marital r*pe in Nigeria
By Arinze Chijioke In the early days of Sandra Izuckukwu’s marriage in 2019, her husband, Sunday Izuchukwu, did everything she...
INVESTIGATION… LIVES ON THE LINE (IV): Surviving in a dangerous media environment
This investigation is on the unresolved killing of three Nigerian journalists while on assignments between 2019 and 2020. For six...
INVESTIGATION… LIVES ON THE LINE (III): Precious Owolabi was killed covering a protest
This investigation is on the unresolved killing of three Nigerian journalists while on assignments between 2019-2020. For six months, Nigerian...
INVESTIGATION… LIVES ON THE LINE (II): Alex Ogbu was telling a story but became the story
This four-part series investigation is on the unresolved killing of three Nigerian journalists while on assignments between 2019 and 2020....
SPECIAL REPORT… TELECOMS BLACKOUT: Nigeria’s latest tactic against banditry grounds businesses, forcing residents beyond borders
The fight against notorious bandits raining terror and kidnapping students in Northwest Nigeria took a new dimension in September as...