IMF warns about the “Dark Side” of Bitcoin and demands regulations

IMF warns about the “Dark Side” of Bitcoin and demands regulations

If you thought you would only hear about the “Dark Side” in the Star Wars saga or another Sci-Fi movie, let me tell you that you were as wrong as me.

Last year was a busy one for Bitcoin, with steep gains and sharp falls, becoming the favorite topic among its critics within the financial world, who sought to warn investors about the risks of operating with virtual currencies.

Now, the International Monetary Fund (IMF) joined the conversation. Christine Lagarde, managing director of the IMF, praised the technology behind these assets (Blockchain) saying “is an exciting advancement that could help revolutionize fields beyond finance. It could, for example, power financial inclusion by providing new, low-cost payment methods to those who lack bank accounts.”

However, Lagarde considered that the same reason that crypto-assets are so appealing is also what makes them dangerous, saying they also have a “Dark Side” because they are “typically built in a decentralized way” which gives them “an element of anonymity, much like cash transactions. The result is a potentially major new vehicle for money laundering and the financing of terrorism.”

To prevent this unlawful acts, the official said regulatory frameworks must be developed to meet the challenge, and suggested using the same Bitcoin technology, like Distributed Ledger Technology (DLT) to speed up the information exchange between market participants and regulators, in addition to biometrics, artificial intelligence and cryptography to improve the digital security and identify suspicious transactions in almost real time.

According to Lagarde, all this efforts require a close international cooperation to succeed. “Since crypto-assets know no borders, the framework to regulate them must be global as well.”

From the standpoint of those preventing money laundering, digital assets surely pose a threat to the implemented system, which considers processes and interactions under a specific control.

A deep analysis among all the participants is very important, to discuss the advantages and disadvantages of virtual currencies. Nowadays, there is nothing more anonymous than cash payments and we are facing a technology that, with the willingness of those involved, can be improved with the premise of keeping the current benefits.

The regulated financial entities must begin to consider virtual currencies in their compliance and prevention processes, as soon as governments begin to recognize them as real payment alternatives. In addition, having and alternate form of payment in the conventional financial system could be also a healthy competition which, in many cases, could help ease the abusive stance from banks and other financial intermediaries.

So, what do you think? Are cryptocurrencies the perfect fit for money laundering and finance terrorism? Or will the ‘Jedi Knights’ come to soften the current abusive financial and economic models?

 

By Antonio Menéndez

Source: La Nación

https://www.lanacion.com.ar/2116865-el-fmi-advierte-sobre-el-lado-oscuro-del-bitcoin-y-propone-regularlo

  • Antonio Menéndez

    Antonio Menéndez

    Técnico en Sistemas Computacionales, con más de 20 años de experiencia en soporte técnico presencial y a distancia. HP Technical Support Certificate A+, DELL Technical Support Certificate EMC, NEXXT Solutions Certificación en Cableado Estructurado. Amplia experiencia en Administración de Servidores.

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