Regulators are quite careful when it comes to digital assets all over the world. Regions like Europe, on the other hand, are concentrating on the regulatory element. On the other hand, countries like China have implemented a strict crypto crackdown. In recent research, the International Monetary Fund showed how outright prohibiting crypto assets would not be the best long-term strategy for mitigating risks. The report specifically mentioned.
Although a few nations have outright outlawed crypto assets due to their hazards, this strategy might not be successful in the long run.
Instead, the international organization wished for nations to concentrate on “addressing the drivers of crypto demand.” The demands of citizens for improved transparency, their needs for digital payments, etc. The bank also advised including cryptocurrency asset transactions in national statistics. This will make it easier to consistently assess demand and traffic.
The IMF said that in 2022, Latin American nations like Brazil, Argentina, Colombia, and Ecuador placed among the top 20 regions in terms of worldwide adoption of cryptocurrency, citing a Chainalysis analysis. The report made note of,
They are looking for the advantages that digital assets are said to provide, such as protection from erratic domestic macroeconomic conditions, getting around capital regulations, increasing financial inclusion for unbanked communities, and fostering more competition.
It should be noted, though, that Argentina later outlawed cryptocurrency purchases in May 2022. According to the IMF, these economies have outlawed the usage of cryptocurrency due to “concerns.” The topics that dominated them were “their impact on financial stability, currency and asset substitution, tax evasion, corruption, and money laundering.”
Nevertheless, in this case, restrictions might save the day. In the region, 12 of the 19 jurisdictions evaluated by the IMF in a document published in the middle of 2022 “either already have a special regulatory framework in place or are in the process of creating one.”
The bank claims that existing laws are working well because they are addressing concerns related to financial stability, currency substitution, corruption, etc.