UNCTAD takes aim at crypto in developing world in a series of critical policy briefs
The United Nations Conference on Trade and Development (UNCTAD) released a policy brief Wednesday on cryptocurrency. It is the third brief in a row the agency has dedicated to crypto, and together they represent a detailed assessment of the risks crypto presents for developing economies and options for resolving those risks.
UNCTAD Policy Brief No. 102, dated July but newly released, argues that although cryptocurrency can facilitate remittances and encourage financial inclusion, it can also undermine domestic resource mobilization in developing economies by enabling tax evasion by hiding the ownership of financial flows and directing them out of the country. The authors of the brief state, “Cryptocurrencies share all the characteristics of traditional tax havens – the pseudonymity of accounts, and insufficient fiscal oversight or weak enforcement.”
Most developing countries do not have tax regulations covering cryptocurrencies, and the lack of a third-party reporting system makes it easy to hide crypto holdings, the brief noted. It continued:
The brief recommends that developing countries define the legal status of cryptocurrencies and set reporting requirements for crypto service providers. In addition, it recommends the implementation of a “global tax cryptocurrency regulation” and crypto holding and trading information sharing system. Higher taxes on cryptocurrencies compared to other assets would discourage holding them and using them for transactions, the brief noted.
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This is the third publication focused on crypto that UNCTAD has released in recent weeks. Its previous policy brief encouraged developing countries to implement a
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