The adoption of cryptocurrencies on emerging markets presents risks for monetary sovereignty and financial resilience, the giant of credit ratings Moody said on Thursday.
The risks are the most acute in the fields where the use of cryptography extends beyond investment in economies and funds, according to the report. Moody’s suggests that a higher penetration of the stalls fixed to the US dollar weakens monetary transmission when it leads to prices and regulations occurring more and more outside the domestic currency of a market.
Stablecoins are crypto tokens set for the value of a traditional financial asset, such as a fiat currency, with The most common US dollar.
“This creates” cryptocurrency “pressures similar to unofficial dollarization, but with greater opacity and less regulatory visibility,” said Moody’s.
Cryptocurrency can also provide new ways to make capital leaks, through pseudonym portfolios and offshore exchanges, allowing individuals to discreetly move wealth abroad, undermine the stability of the exchange rate, according to the report.
Moody’s also underlined how much the increased property of cryptocurrency was concentrated on emerging markets, in particular in Southeast Asia, Africa and parts of Latin America. Here, adoption is often driven by inflationary pressure, pressure currency and limited access to banking services. On the other hand, adoption in more advanced economies, adoption is motivated by institutional integration and regulatory clarity.
The property of cryptography extended to around 562 million people by 2024, an increase of 33% compared to 2023, according to the report.
Read more: Adoption of Stablecoin is defined on the law on engineering, hit 4 t $ in cross -border volume: Eybay
