Crypto has failed to reduce financial risks in emerging markets, according to a study published by the Bank for International Settlements (BIS). The report suggests that regulation of the sector would be preferable to an outright ban, as it would allow for the technology to be applied in socially useful directions while also curbing the risks of large and sudden changes in capital flow.
Cryptoassets have so far not reduced but rather amplified the financial risks in less developed economies, the study said. The advent of exchange-traded funds (ETFs) based on crypto could heighten these risks, allowing a wider range of people to get into the market.
The skepticism of global organizations against crypto is nothing new. In July, BIS said that crypto can’t be used as money due to inherent flaws, while the United Nations’ development arm has said emerging economies should bring in widespread restrictions to curb risks to tax collection and monetary policy.
The report echoes comments made by key U.S. and International Monetary Fund officials, who advocated for a similar regulation-over-ban approach at a recent G20 roundtable.