UNITED NATIONS: The UN Conference on Trade and Development (UNCTAD) urged for action to curb cryptocurrencies in developing countries in three policy briefs.

The UN trade and development body warned on Wednesday that private digital currencies are an unstable financial asset that may also carry social dangers and costs, even though they have benefited some users and made remittances easier.

The three recently issued UNCTAD policy briefs, which were released on Wednesday, looked at the costs and risks associated with cryptocurrencies, including the dangers they pose to monetary systems' security, domestic resource mobilisation, and financial stability.   The Covid-19 pandemic has seen an exponential rise in cryptocurrency use globally, including in poorer nations.

According to UNCTAD, the ease of remittances and the usage of cryptocurrencies as a hedge against currency and inflation risks are some of the factors driving their rapid popularity in poor nations.

Recent market shocks involving digital currencies indicate that there are private dangers associated with holding them, but if the central bank intervenes to safeguard financial stability, the issue becomes a public one, the agency stated.

Cryptocurrencies could threaten a nation's monetary sovereignty if they take off as a common form of payment and perhaps informally supplant national currencies.  The so-called "stablecoins," a category of digital currency that is linked to the US dollar, present special hazards in developing nations with unmet demand for reserve currencies.

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