Recently, the emergence and adoption of digital currencies have progressed rapidly, with some nations already accepting BTC as a means of payment. As noted by a study released on the 25th of March by the IMF titled “Crypto, Corruption, and Capital Controls: Cross-Country Correlations, individuals living in nations with high levels of fraud are more inclined to use cryptos than those residing in other nations, “
“The usage of digital assets is positively and strongly linked with greater perceptions of corruption as well as more stringent capital restrictions,” according to the IMF’s findings.
A survey carried out in 55 nations to probe the factors that determine the use of virtual currency disclosed that such states also have harsh capital controls, making it extremely difficult to transfer funds abroad discreetly, resulting in a greater increase in crypto users.
Furthermore, according to the analysis, crypto adoption is more significant in regions that are corrupt or have substantial capital limitations, reinforcing the need for tougher industry regulation. Those in nations with a well-developed conventional financial system will be less inclined to use cryptocurrency.
Bitcoin Is More Stable Than Fiat Currency
The IMF interviewed about 2,000 to 12,000 people in each nation on their usage of cryptocurrency, which brings the number to over 110,000 people in more than 55 countries. Several characteristics were discovered by the researchers that indicate why BTC is prevalent in a country that the next. Popular crypto like BTC might have a more stable value in the long run than paper currency, especially in light of the prevailing high inflation rates.
Clamour For More Stringent Regulations On Crypto Firms
Since poorer countries have a severe capitalistic system of controls, which stops funds from flowing in the nation’s economy, crypto has become a tool for bypassing taxes and government rules. According to the researchers, “The complete anonymity of virtual currency makes it a possible vehicle for illegal flows, particularly those resulting from fraud.”
From these findings, the researchers argued that harsh international legislation of cryptos, such as KYC that requires crypto users to be recognized, is needed instead of the care-free attitude in the industry. The research reveals why authorities may attempt to force brokers, such as crypto exchanges, to follow Know Your Customer protocols — identity verification processes intended to fight financial fraud. This limitation is already present in several nations, like the US. Other nations may enforce the same legislation in the coming months.