IMF Calls Cryptocurrency Correlated With Corruption

Crypto is said to be correlated with corruption. (photo; doc. Antara)

JAKARTA – Bitcoin prices fell again, this made altcoins fall too. In the midst of the decline, negative sentiment also began to arrive, including from the International Monetary Fund (IMF). The organization states that the adoption of crypto assets is closely related to corruption and capital control.

In a study, the IMF said that the use of cryptocurrencies was "significantly and positively" linked to corruption and capital controls, or restrictions placed on the domestic economy to limit the inflow and outflow of foreign money.

“Empirical investigation of the factors underlying the growth in crypto asset use is still in its early stages, due to data limitations. In this paper, we present a simple cross-country analysis drawing on recently released survey-based data,” the IMF said.

“We explored the correlation of crypto asset use with indicators of corruption, capital controls, history of high inflation, and other factors. We found that the use of crypto assets was significantly and positively associated with corruption and capital control," said the IMF researcher.

The IMF said that cryptocurrencies would benefit from stricter regulations such as requiring exchange platforms to implement strict know-your-customer (KYC) procedures.

IMF researchers also say that crypto technology exacerbates some of the problems posed by the use of cash, such as the ability to send large amounts of nearly untraceable funds across national borders.

“Crypto asset pseudonyms (where transactions require only a digital identity) make them a potential vehicle for illicit flows, including corrupt proceeds. This pseudonym is not an intrinsic feature of the underlying technology, but rather a choice made in the design and practice of most crypto assets that exist today,” the IMF researcher added.

Furthermore, the study also explains that anonymity in the crypto world is seen as an aid to crime and tax evasion. The reason is with crypto assets, the movement of the flow of funds in very large amounts becomes so fast and easy.